Toyota Investing $500 Million in Uber in Driverless Car Pact
Auto maker and ride-hailing company will jointly work on driverless-vehicle development as part of investment
Toyota Motor Corp. TM 3.01% is set to invest about $500 million in Uber Technologies Inc. as part of an agreement by the two companies to work jointly on driverless-vehicle development, according to people familiar with the matter.
Toyota’s investment values Uber at about $72 billion, slightly higher than where SoftBank Group Corp. valued the ride-hailing company earlier this year with its funding.
Uber and Toyota declined to comment.
Uber has been seeking ways to lower development costs and losses in its autonomous-vehicle unit after a fatal crash involving one of its cars earlier this year in Arizona. Last year, the Uber division spent about $750 million on self-driving car development before making cuts this year, according to people familiar with the matter.
In recent months, Uber has closed its Arizona autonomous-vehicle operations and laid off about 400 test drivers, some of whom it will rehire after undergoing new training. Uber also has taken its self-driving vehicles off the roads in the San Francisco Bay Area, Pittsburgh and Toronto while investigators look into the circumstances of the Arizona crash.
Technologists believe self-driving vehicles could greatly reduce travel time and save lives by eliminating human error.
For ride-sharing concerns like Uber and Lyft Inc. the development could cut their biggest expense: paying human drivers. For auto makers such as Toyota, the potential of self-driving cars to power car-sharing services represents a major challenge to an industry dominated by individual car ownership.
Toyota’s investment is reminiscent of General Motors Co.’s $500 million bet on Lyft in early 2016 as part of a plan to jointly development autonomous vehicles. That deal marked the first time a major car maker joined forces with a ride-hailing company, and accelerated a confusing array of alliances between Detroit and Silicon Valley in a race to seize a stake in the future of personal transportation.
GM only a few months later in 2016 acquired startup Cruise Automation Inc., maker of a system for retrofitting existing vehicles with autonomous-driving software. That acquisition enabled GM to go its own way and become an able competitor to Uber, Alphabet Inc.’s Waymo and others in the effort to get driverless cars on the streets.
SoftBank’s Vision Fund, a big backer of Uber, in June bought a nearly 20% stake in GM’s Cruise as the auto maker plans to launch a robot ride-hailing service next year.
Last month, Ford Motor Co. carved out its self-driving car program into a subsidiary known as Ford Autonomous Vehicles LLC, to make it easier to attract third-party investors.
Meanwhile, Fiat Chrysler Automobiles N.V . is providing some vehicles used by Waymo’s autonomous car program, and has joined with BMW Group and Intel Corp. to develop technology for a self-driving car by 2021. It expects to launch its own autonomous vehicles early next decade.
Toyota hasn’t been as quick to embrace autonomy as rivals such as GM, but has moved quickly recently to bolster its research into self-driving capabilities. The Japanese company has set a goal for debuting an autonomous vehicle by 2020 and earlier this year Toyota and two affiliates earmarked nearly $3 billion to build software for such vehicles.