While Volvo didn’t disclose financial terms, but the Journal estimates the deal to be worth just over $1 billion, about 4.5 percent of Volvo’s current annual sales.
“Our aim is to be the supplier of choice for AD (autonomous driving) ride-sharing service providers globally. Today’s agreement with Uber is a primary example of that strategic direction,” Volvo CEO Håkan Samuelsson said in a statement.
Under the agreement, Volvo will build “base vehicles” using Scalable Product Architecture (SPA), an automobile platform Volvo developed in 2014 and currently uses for Volvo’s XC90 midsize SUVs and 90 series cars. Uber will be able to add its own autonomous driving systems on these vehicles.
In a separate project, Volvo will use the same base vehicles for a self-driving product line slated for release in 2021.
The supply agreement is a major and concrete step, since Volvo and Uber formed a $300 million joint project to develop autonomous cars in August 2016. Uber entered into a similar supply partnership with German carmaker Daimler in January.
Uber tested its first self-driving car, a hybrid Ford Fusion, in May 2016 in Pittsburgh, Pennsylvania. The pilot was later expanded to San Francisco and Tempe, Arizona. Uber’s self-driving cars are tested with two safety drivers in the front seats, just in case human intervention is needed.
In March, an Uber-commissioned self-driving Volvo XC90 was struck in a crash in Tempe when another vehicle failed to yield. No serious injuries were incurred. The incident put a short halt in Uber’s self-driving service in all three cities, but operation was quickly resumed after two days when police found Uber’s self-driving car not at fault, The Washington Post reported.
Uber’s current count of self-driving cars is in the hundreds. Until October, these cars have accumulated more than one million miles in autonomous driving, the company said in a blog post.