This morning Uber Technologies Inc. announced that they have agreed to purchase 24,000 Volvo XC90 plug-in hybrids from the Swedish company to for a fleet of driverless cars. Let that sink in for a moment, 24 thousand self-driving sports utility vehicles. That is 10,000 more than the number of yellow cabs in New York City.

Uber Committed to self-driving, electric vehicles

The Volvo XC90’s are of the plug-in hybrid variant as shown in the photos and will be delivered between 2019 and 2021. This is the first commercial order of a ride-hailing provider, according to Volvo. Uber will add its own sensors and software to enable driverless operation.

While Volvo has said to be committed to electric vehicles promising to at least hybrid-ize all of its vehicles by 2019, Uber seems to be committed to replacing their highest cost factor, namely human drivers in its on-demand taxi service. The San Francisco based company already agreed to use 100 XV90’s in self-driving tests in Pittsburgh.

“This new agreement puts us on a path toward mass-produced, self-driving vehicles at scale,” Jeff Miller, Uber’s head of auto alliances, told Bloomberg News. “The more people working on the problem, we’ll get there faster and with better, safer, more reliable systems.”

Major disruption

The Uber purchase represents a business opportunity for car manufacturers but one that comes with a caveat. Uber’s focus on self-driving cars can bring a major disruption to the traditional automotive industry, which is used to selling cars to individual owners.

In a statement Volvo said:

“The automotive industry is being disrupted by technology and Volvo Cars chooses to be an active part of that disruption,” said Håkan Samuelsson, president and chief executive. “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.”

The deal is a big boost for vehicles sales at Volvo and will help to lower the per-vehicle-cost of the fully autonomous system that the Chinese-controlled group is planning to deliver as of 2021. Volvo Cars’ engineers have collaborated closely with engineers from Uber to the develop the XC90 SUV’s that are to be supplied to the ride-hailing company. The base vehicles have all the required safety, redundancy, and core autonomous driving technology on board for Uber to add its own self-driving tech.

“We’re thrilled to expand our partnership with Volvo,” said Jeff Miller, Head of Auto Alliances, Uber. “This new agreement puts us on a path towards mass-produced self-driving vehicles at scale.”

Uber has yet to confirm a time frame on when it may introduce driverless cars. One of the major challenges for autonomous vehicles remains the eye contact and hand signals that normal drivers use in their day to day commutes.

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