The talks are still ongoing and there is no certainty a deal could be reached, the source said, adding that Uber is also considering taking stake in the new company if Aurora takes over ATG.

Uber's ATG, which works to develop autonomous driving technology, counts Toyota Motor Corp and SoftBank Group Corp among its investors. Earlier last year, the unit had raised $1 billion (758 million pounds) from a consortium of investors including SoftBank, that valued it at $7.25 billion.

Uber has been seeking options for its autonomous vehicle divisions, a heavy cash burn machine, including seeking more outside investment, as Chief Executive Officer Dara Khosrowshahi refocused on core businesses including ride-hailing and food delivery since the pandemic hit.

Uber and Aurora declined to comment. TechCrunch was the first to report about this deal.

Aurora is among dozens of startups, automakers and large technology companies working on self-driving car systems, eager to capitalize on a sea change in the transportation industry.

The startup, which is already testing its vehicles in the San Francisco Bay Area and Pittsburgh, in July said it was expanding testing and development of its vehicles to Dallas-Fort Worth Area in Texas.

(Reporting by Krystal Hu in New York and Akanksha Rana in Bengaluru; Editing by Shailesh Kuber)

By Krystal Hu