Ridesharing company Uber has agreed to buy 24,000 Volvo XC90 SUVs as it seeks to create a fleet of driverless vehicles.
Uber said it will buy the vehicles starting in 2019 in a deal reported by The Financial Times to be worth close to $1.4 billion. The agreement is non-exclusive.
Uber has been testing the XC90 in San Francisco, Tempe, Ariz., and Pittsburgh with safety drivers.
Drivers are the biggest cost for the ridesharing company. More than 2 million people drive for the company.
“It only becomes a commercial business when you can remove that vehicle operator from the equation,” Uber’s Head of Auto Alliances, Jeff Miller, told Reuters.
The deal would give Uber its first commercial fleet of cars and would be the largest single sale agreement in the autonomous car market.
A competing autonomous vehicle maker, Waymo, has announced plans to launch its own self-driving ride service, which many have seen as a potentially serious competitor to Uber.
“The automotive industry is being disrupted by technology and Volvo Cars chooses to be an active part of that disruption,” Volvo CEO Håkan Samuelsson, said in a press release. “Our aim is to be the supplier of choice for AD ride-sharing service providers globally. Today’s agreement with Uber is a primary example of that strategic direction.”
Uber is buying the base vehicles, and adding its own driverless technology on top of technology from the manufacturer designed in coordination to make the Uber technology work. But Volvo, which is now Chinese-owned, said it also plans to use the car in the development of its own independent autonomous car, planned for release in 2021.
“This new agreement puts us on a path towards mass produced self-driving vehicles at scale,” Uber’s Miller said in the statement.