Japanese carmaker Toyota is investing $500 million in Uber to create a partnership in which both the companies will jointly develop self-driving cars.
Toyota said this would entail “mass-production” of autonomous cars that would be pressed into Uber’s ride-sharing network. Both firms are looking at the partnership as a means to catch up with rivals in the highly competitive driverless car market. The deal values Uber at $72 billion despite the company’s mounting losses. The valuation is up by 15% since its last investment in May but is on par with a previous valuation made in February, both 2018.
Toyota’s Sienna Minivan models will be the fleet mules fitted with autonomous driving technology. Pilot trials are slated to commence from 2021. Shigeki Tomoyama, executive VP of Toyota Motor Corporation, said: “This 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.”
Both Toyota and Uber are seen as somewhat behind on the autonomous car timeline compared to rivals like Waymo who are quite ahead in the development and testing phase. Uber has also had to put its driverless car trials on hold after one such Uber SUV struck and killed a pedestrian in Tempe, Arizona, in March this year. Ever since the incident, the ride-sharing giant has stopped any more testing of autonomous vehicles while also closing operations in Arizona.
This is where Toyota comes in, as it could provide Uber the financial backing to continue its driverless car trials, at a time when the ride-hailing company is desperate for external help after the unfortunate Arizona incident. Sharing the load as well as the cost of research and development would keep Uber’s investors satisfied as the company aims for its initial public offering in 2019. The American firm’s driverless car know-how and Toyota’s Guardian system will together cohesively make for an autonomous car that is truly safe and harmless.
On the other side of the globe, Toyota’s shares rose sharply in Japan following reports of the deal. Analysts calculate that personal car ownership will drop drastically once the self-driving, ride-sharing future is fully upon us, with major companies purchasing large fleets of vehicles from carmakers. In a nutshell, Toyota could just have secured its biggest customer by pouring money into Uber at the right time.
The new investment extends an existing relationship between Toyota and Uber, giving the latter a big boost to continue its autonomous vehicle research. Uber has also partnered with Daimler which aims to own and operate its own self-driving cars on Uber’s network.