The deal marks a strategic shift in Uber’s approach to maintaining its lead in the ride services industry.
In a bid to catch up on rivals in the hotly crowded automated autonomous driving industry, Toyota Motor Corp said it will invest $500 million in Uber Technologies Inc so as to jointly develop self-driving cars.
Although Toyota is one of the world’s top carmakers, it is seen as lagging behind the competition in self-driving cars.
The deal between Toyota and Uber will deepen an existing relationships and marks Uber’s CEO Dara Khosrowshahi’s strategy of developing Uber through partnerships rather than go head-to-head with the competition.
Ever since Uber’s SUV killed a pedestrian in Tempe, Arizona, in March 2018, Uber has laid off hundreds of test drivers and closed it operations in Arizona – its autonomous testing hub.
The deal will now breath some new life into Uber’s self-driving business. The investment values Uber at $72 billion. While Uber will contribute its autonomous driving system to the project, Toyota’s input will be its Guardian technology which offers automated safety features such as lane-keeping. Toyota’s Guardian technology does not enable the vehicle to drive fully autonomously.
The combined technology will be built into Toyota’s Sienna minivans and will be deployed on Uber’s ride-hailing network starting in 2021, said Uber.
As per Jeff Miller, Uber’s head of business development for strategic initiatives, the partnership “really paints the picture of how we envision deploying autonomous technology in the long term.” This includes licensing Uber’s autonomous technology to carmakers and enlisting a third party to own and maintain the fleet.
Miller went on to add, the third party which will operate Toyota’s autonomous fleet has yet to be chosen.
For Toyota, the “agreement and investment marks an important milestone in our transformation to a mobility company as we help provide a path for safe and secure expansion of mobility services like ride-sharing that includes Toyota vehicles and technologies,” said Shigeki Tomoyama, Toyota’s executive vice president in a statement.
The partnership assumes significance since it marks a strategic shift: while Travis Kalanick, Uber’s former CEO had insisted on developing a proprietary self-driving technology and had termed autonomous cars as being “existential” to Uber, Khosrowshahi’s aims to nurture Uber’s growth through strategic partnership rather than develop the technology on his own.