Uber said Monday it will sell its self-driving research unit, Advanced Technologies Group (ATG), to Aurora Innovation and will invest $400 million in ATG's Silicon Valley rival.

Why it matters: Uber's decision to abandon self-driving car R&D is an acknowledgment that autonomous vehicle technology is still a long way off, with no certain payoff in sight.

• By partnering with Aurora, and taking a stake in the company, it's keeping some chips on the table for a future robotaxi service.
• Uber will end up owning 26% of Aurora, and CEO Dara Khosrowshahi will join Aurora's board of directors.
• Uber ATG investors, including Toyota, DENSO and Softbank Vision Fund, and Uber employees will own 14% of Aurora.
• The deal values Aurora at $10 billion, Axios has learned.
• The deal is expected to close in the first quarter of 2021.

Driving the news: Under Khosrowshahi's leadership, Uber has been moving to offload unprofitable businesses to focus on its core ride-hailing and food delivery businesses.

• As Axios scooped last week, Uber is in advanced talks to sell Uber Elevate, its flying taxi business, to Joby Aviation.

Context: Uber's self-driving efforts have been plagued with controversy for years.

• In 2017, Waymo sued Uber for stealing trade secrets when it acquired a startup founded by a former Waymo employee, Anthony Levandowski, who was later sentenced to 18 months in prison.
• In 2018, an Uber self-driving test vehicle struck and killed a pedestrian in Tempe, Arizona. Uber paused its development work to revamp its safety culture, and the accident sent shockwaves across the AV industry.
• Uber turned to outside investors for ATG last year, a sign it no longer wanted to bear the full brunt of financing the unit.

Yes, but: Aurora has challenges of its own.

• Founded by three veterans of the autonomous vehicle industry, including former Google exec Chris Urmson, Aurora has long focused on developing a full self-driving technology stack, or "driver," that can be incorporated into others' vehicles.
• But early partnerships with companies like Hyundai, Byton and Volkswagen fizzled, and Aurora has since shifted its focus from robotaxis to long-haul trucking and commercial vehicles, including a partnership with FiatChrysler Automobiles on delivery vans.

What to watch: Aurora will continue to focus on self-driving trucks, but said its acquisition of Uber ATG will give the company new opportunities in the autonomous ride-hailing business, too — most likely with Toyota.

• “We are aware of Aurora Innovation’s acquisition of Uber Advanced Technologies Group (ATG), and look forward to exploring automated vehicle technology collaboration opportunities with them," a Toyota spokesperson told Axios.
• Aurora, with 600 employees, will take on "a majority" of Uber ATG's 1,200 employees.

What they're saying: "While (ATG's) advances in software, hardware, product design, and more have flown under the radar, they have made tremendous headway on many fronts," Aurora's Urmson said.

• "They are committed to rigorous testing and have built a strong safety culture. With their technical prowess in both research and practical applications, ATG will strengthen and accelerate the first Aurora Driver applications for heavy-duty trucks while allowing us to continue and accelerate our work on light-vehicle products.

TechCrunch first reported the companies were in talks last month.

Editor's note: This story has been updated with comment from Toyota.