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Uber is Rolling Out a Self-Driving Fleet: What it Means

Uber customers in Pittsburgh will soon find themselves riding in a self-driving Volvo like this one. Image source: Volvo Cars.

Swedish automaker Volvo Cars and ride-hailing giant Uber said on Thursday that they have joined forces to further develop self-driving technology. Bloomberg reported that the two companies will team up on a pilot program using self-driving Volvos to transport real live Uber customers in Pittsburgh -- starting in the next few weeks.

What's happening: Self-driving Uber Volvos rolling out within weeks

According to Bloomberg's report, several Volvo XC90s equipped with the current iteration of Uber's self-driving technology will be added to Uber's fleet in Pittsburgh by the end of August.

For now, it's just a handful of cars. But Volvo, which is owned by China's Geely Automotive Holdings (NASDAQOTH: GELYF), has committed to deliver 100 of them by the end of 2016.

While these self-driving Volvos will be giving rides to real Uber customers, this is clearly a development program: The cars will have human drivers on board, professionally trained engineers who will have their fingers on the steering wheels, ready to take over if needed. The cars will also have "co-pilots," a second engineer in the front passenger seat who will record bugs and glitches in the system as they arise. 

Why is it just in Pittsburgh?

Self-driving systems like the one developed by Uber rely on precise three-dimensional maps of the areas they travel in. Uber has had a self-driving test car operating in Pittsburgh for several months; it has probably put together a "good enough" map of the area to move on to this larger trial. But it's also likely that these Volvo test cars will be gathering data that will continue to develop Uber's 3D maps of Pittsburgh. 

Wait. Uber has developed its own self-driving tech?

Yes. About two years ago, Uber CEO Travis Kalanick recruited a slew of robotics experts from Carnegie Mellon University and set in motion the development of an Uber self-driving system that could be installed on existing cars. The hope is to eventually remove the need for human Uber drivers.

That program has taken an intriguing step forward with news that Uber has purchased Otto, a Silicon Valley start-up that had been working on driverless-truck technology. Otto has developed a kit that allows tractor-trailer trucks to steer themselves on highways.

Bloomberg reported that some of the technology from Otto's kit will be incorporated into Uber's system -- and it's possible that Uber will use Otto's technology as a springboard to enter the trucking business in some way.

What's the deal between Volvo and Uber?

The pilot program is the first visible fruit of a larger deal between Uber and Volvo Cars. Under the deal, Volvo is developing base vehicles that will be able to incorporate advanced driver-assist technologies all the way up to full self-driving capabilities.

Volvo will make the cars and sell them to Uber, which will then add its own in-house self-driving system and put the cars into service. Volvo will also use the cars in its own self-driving development program.

It's not an exclusive deal. Uber has designed its system to be adaptable to many different kinds of cars, and it plans to partner with other automakers in the future.

Isn't Lyft planning something similar?

Yes. In May, Lyft said that it is planning a very similar pilot program in an unspecified U.S. city "within a year." That program will use self-driving electric Chevrolet Bolts developed by Lyft partner General Motors (NYSE: GM). GM bought a 9% stake in Lyft earlier this year. 

So what does this mean?

It's a milestone: The first commercial use of self-driving technology on public roads. That's a big deal.

That said, from a business perspective, it probably won't mean a whole lot in the long run, given that Lyft and GM are on the verge of a similar program and other rivals probably aren't far behind. But taken together with Lyft's plans, and Ford's (NYSE: F) announcement earlier this week that it plans to mass-produce a driverless car for ride-hailing and car-sharing by 2021, it's clear that the world -- at least, the world of urban ride-hailing -- is changing quickly.

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John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.