Toyota Motor Corp. said Tuesday it had agreed with ride-hailing firm Lyft Inc. to acquire the U.S. firm's self-driving division for $550 million, aiming to accelerate its development of autonomous driving technologies.
The purchase via Woven Planet Holdings Inc., a Toyota unit engaging in software development, will equip the Japanese automaker with development bases in California and London in addition to Tokyo.
Woven Planet and Lyft also have agreed to use Lyft's system and fleet data to speed up commercialization of Woven Planet's automated-driving technology and improve its safety features.
This will be the first buyout by Woven Planet since it began operations in January this year. It plans to complete the acquisition of Lyft's division, Level 5, in five years.
"Bringing Level 5's world-class engineers and experts into the fold — as well as additional technology resources — will allow us to have even greater speed and impact," Woven Planet CEO James Kuffner said in a statement.
Toyota is also working in cooperation with Aurora Innovation Inc., a U.S. driverless technology startup, which acquired the self-driving unit of Uber Technologies Inc. in which Toyota had invested.
The government has been keen to push for the development of self-driving cars. A revised law took effect in April of last year allowing level-3 autonomous vehicles to run on public roads.
Autonomous driving technology is classified into five levels, ranging from level 1, which allows either steering, acceleration or braking to be automated, to level 5, at which driving is fully automated.
"Assuming the transaction closes within the expected timeframe and the COVID recovery continues, we are confident that we can achieve Adjusted EBITDA profitability in the third quarter of this year,” said Lyft co-founder and President John Zimmer in a prepared statement announcing the deal, which is expected to close during the third quarter.
Lyft fielded interest from "a number” of autonomous vehicle companies before selecting Toyota’s Woven Planet, Zimmer told analysts during a call.
A key element in the decision to sell the unit, Zimmer said, was recognizing that Lyft no longer needed to develop its own autonomous vehicle technology. Instead, he said, multiple partnerships with other companies working on the technology would deliver the highest value to the Lyft platform.
"It’s important, at this point, not to get into an exclusive relationship,” Zimmer said.
In an interview with Bloomberg Television, Zimmer said the deal represented Lyft "doubling down” on the autonomous driving part of its strategy. "This allows us to work with multiple partners, to bring the best and safest technology to the platform for our customers and to focus on the customer experience and the marketplace technology,” he said.
The sale comes as Lyft’s ride-hailing demand is rebounding, after the pandemic slammed revenue by keeping would-be riders homebound.
The lockdowns were particularly hard on Lyft, which operates only in North America and, unlike its larger rival Uber, does not have businesses like food delivery to offset ride-hailing losses.
But even as the ride-hailing industry shows signs of recovery, expectations for self-driving car development have been humbled. Long hailed as a technology that would be soon be ready to commercialize broadly and cheaply, its development is costing more and taking longer to safely deploy than initially expected.
By selling its autonomous driving unit, Lyft follows Uber — which sold its self-driving group to Aurora Innovation Inc. late last year. Uber has been offloading a variety of pricey side projects as it focuses on turning a profit by the end of 2021.
After the addition of the Lyft staffers, the group at Toyota’s Woven Planet will consist of about 1,200 employees. "This acquisition marks the first in a coordinated strategy to consolidate leading technologies and talent to help realize this vision,” said George Kellerman, head of investments and acquisitions for Woven Planet, in a statement.
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