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Self-driving car startup Aurora will go public by merging with special purpose acquisition company Reinvent Technology Partners Y after rival Waymo scored a big funding round.

The proposed transaction values Aurora at $11 billion. It will provide the startup with $2.5 billion in cash to fund growth. It should close in the second half of 2021. Then the company will take the name Aurora Innovation and trade under the symbol AUR.

$1 Billion Private Investment In Self-Driving Car Startup

Additionally, it includes a private investment in private equity of $1 billion. Investors and partners in the PIPE include major Tesla shareholder Baillie Gifford. Also Uber, Volvo, Paccar, Fidelity and T. Rowe Price.

Aurora was founded in 2017 by former Alphabet Google and Uber veterans. A third co-founder, Sterling Anderson, led Tesla's AutoPilot team.

Meanwhile, Aurora expects to launch its first autonomous product for self-driving trucks in late 2023. Eventually it expects to expand into the last-mile delivery and ride-hailing markets.

Volvo and Paccar dominate the market for Class 8 trucks, which include tractor-trailers.

In a new release Thursday, Aurora described the merger agreement as a major step toward commercializing self-driving vehicles.

The Aurora Driver is expected to be a Level 4 system powering a range of vehicles from sedans to Class 8 trucks. It includes long-range lidar sensors that help the driverless vehicle "see" and track objects on the road even in poor light or weather.

Google's Waymo Driver also offers Level 4 autonomy, meaning fully automated driving under highly complex urban road conditions, though a driver can take control if needed. On June 16, Waymo announced a $2.5 billion investment round, to advance its autonomous driving technology and grow its team.

However, Waymo, seen as the leader in developing self-driving technology, has come under criticism for moving slower than expected on commercializing its technology. Aurora's seen as a credible challenger to Waymo.

Self-Driving Car Stocks

Shares of Reinvent, soon to be Aurora stock, gained 1.3% in Thursday's stock market trading. Google stock dipped 0.9%. Among lidar stocks, Velodyne Lidar lost 1.3%, Luminar Technologies rose 1.4%, and Ouster added 0.5%.

"By combining with Reinvent and with this incredible group of investors, we are even closer to deploying self-driving vehicles and delivering the benefits this technology offers the world," Chris Urmson, co-founder and CEO of Aurora, said in Thursday's news release.

Urmson exited from Google after being passed over to become CEO of the offshoot that became Waymo. He recently dismissed Tesla's claims that its vehicles can soon operate as driverless taxis.

Another co-founder, Drew Bagnell, helped to lead Uber's self-driving project. In late 2020, Uber sold that project to Aurora.