Uber announced a new deal with Volvo that will allow them to purchase up to 24,000 self-driving cars from the multinational manufacturing company.
Under the new agreement, the ride-hailing company will be able to purchase the new autonomous vehicles once they are deemed “production-ready” and will then draw up plans on how to integrate them into their ride-hailing network.
“Everything we’re doing right now is about building autonomous vehicles at scale,” Jeff Miller, Uber‘s head of automotive alliances, said. “We don’t know exactly how an autonomous world will look. But we know that we want to be the platform that’s at the center of it, from a ride-sharing standpoint.”
Uber and Volvo have been in talks about a possible arrangement for nearly three years, since the ride-hailing company initially began its research and development efforts for driverless vehicles.
The two companies worked closely together to build software and hardware for driverless cars and outfitted the automaker’s XC-90 vehicles with the new technology.
The base vehicles that will be purchased by Uber will be developed off of car architecture currently used on Volvo’s 90 series cars and XC60 midsize SUVs.
This deal is Volvo’s largest deal to date and biggest sale within the autonomous vehicle industry.
Uber has been testing Volvo prototype vehicles for a little over a year and supplying them with safety drivers in the front seat in the event that the system were to fail. These tests have been occurring throughout Tempe, Arizona and Pittsburgh, Pennsylvania.
“Our goal was from day one to make investments into a vehicle that could be manufactured at scale,” said Miller. “It only becomes a commercial business when you can remove that vehicle operator from the equation.”
Financial details of the purchase made between Uber and Volvo weren’t disclosed at the time of the deal announcement. This would also change Uber’s original business model of allowing contractor drivers to buy or lease their own vehicles.
Miller did reveal that a small number of the vehicles purchased from Volvo were bought using equity, and others would be bought using debt financing.
The deal serves as an extension of a $300-million alliance Volvo initially formed with Uber last year, which was mainly focused on designing and financing cars with self-driving systems.
“The only way we could control our own destiny was to work with this technology that had the potential to disrupt our business, and have direct involvement in the creation of it,” Miller continued. “We couldn’t afford to be on the outside looking in. We have to be in the game.”
The Uber-Volvo deal is expected to last from 2019 to 2021. However, when the vehicles will be put on the road has yet to be announced.