Toyota Invests $500M In Uber For Driverless Vehicles

by Bamidele Ogunberu Posted on August 28th, 2018

Houston, Texas, USA : Toyota is investing $500 million investment in ride-hailing giant Uber in a bid to accelerate autonomous ride-sharing, the companies announced on Monday afternoon.

“Combining efforts with Uber, one of the predominant global ride-sharing and automated driving R&D companies, could further advance future mobility,” Shigeki Tomoyama, the president of the Toyota Connected Company, said in a statement. “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 that includes Toyota vehicles and technologies.”

The investment values Uber, one of the world’s most valuable privately held companies, at $72 billion. That’s a significant jump from Uber’s most recently stated valuation of $62 billion, based on a self-reported tender offer at the end of the first quarter. The company lost $659 million last quarter, marking a wider loss than its first-quarter figure, according to its own report.

Under the deal, the companies will incorporate self-driving technology into vehicles based on Toyota’s Sienna minivans, and the companies plan to begin piloting the program in 2021, they said. Toyota has dubbed the platform “Autono-MaaS,” standing for “autonomous mobility as a service.”

The partnership ensures that Toyota’s self-driving technology will be used in Uber’s rapidly growing plans to develop a self-driving ride sharing service. And by 2021, Uber plans to have a fleet of Toyota Sienna Minivan equipped with self-driving technology to provide rides to customers.

And this isn’t the first time an auto company has teamed up with a tech company.

Waymo, the Google-owned self-driving technology company, has formed partnerships with Chrysler and Jaguar Land Rover. And Lyft has worked with Ford and General Motors.

“We’re seeing marriages of companies of complementary abilities,” Brian Collie of Boston Consulting Group said. “Partnerships are quite necessary and create value toward bringing mobility as a service to the market faster.”

Uber has previously tested its self-driving cars in Arizona and California. The company suspended all of its testing on public roads, however, after a self-driving Uber vehicle struck and killed a pedestrian in Arizona earlier this year.

The vehicle misidentified the pedestrian prior to hitting her, according to a preliminary report from the National Transportation Safety Board (NTSB) published in May. The vehicle initially detected the woman as “an unknown object,” then a vehicle and then a bike.

Toyota also halted its self-driving testing on public roads in the United States after the wreck.

Toyota invested $1 billion in Southeast Asian Uber-rival Grab

The investment in Grab will see the two companies expand on their existing partnership and explore new mobility strategies across the region, Grab said. Additionally, an executive of the Japanese manufacturer will be appointed to Grab’s board of directors while a Toyota team member will become an executive officer in the ride-sharing company.

The investment, which Grab said is the largest ever by an automotive manufacturer in the ride-hailing sector, aims to allow the Southeast Asian company to expand its range of online-to-offline services such as food delivery and electronic payments in the region.

“As a global leader in the automotive industry, Toyota’s investment in Grab is based on their conviction in our leadership in driving the adoption of new mobility solutions and expanding [online-to-offline] mobile services, such as GrabFood and GrabPay, in the region,” Ming Maa, president of Grab, said in a statement.

According to Grab, the investment will allow Toyota to further integrate its services such as user-based insurance and predictive maintenance with the Singapore-based company. That could act as an incentive for drivers to drive more safely to enjoy lower insurance premiums.

“Going forward, together with Grab, we will develop services that are more attractive, safe and secure for our customers in Southeast Asia,” Shigeki Tomoyama, Toyota executive vice president, said in a statement included in the announcement.

Uber To Shift From Cars To Bikes For Shorter Trips

Uber plans to focus on electric bikes and scooters over cars for shorter, inner-city travel.

In an interview with the Times, the ride-hailing service’s Chief Executive Dara Khosrowshahi said that more individual modes of transport were better suited for inner-city travel.

Khosrowshahi added that while the shift in emphasis to electric bikes and scooters from cars was part of the company’s long-term strategy, it would mean a further financial hit for the company in the short term.

“During rush hour, it is very inefficient for a one-tonne hulk of metal to take one person 10 blocks. We’re able to shape behavior in a way that’s a win for the user,” Khosrowshahi told the Financial Times.

The CEO noted that the shift also meant riders would likely hire a car for longer trips.

Uber first added e-bikes to its app in February. In April, Uber acquired electric bike-sharing startup Jump, thus making its official entry into the dockless bike-sharing space.

The Jump acquisition was the first merger that Uber made after the appointment of Khosrowshahi as CEO.

In July, Uber announced a deal with scooter hire company Lime that enables Uber customers to rent Lime’s scooters through the Uber app. Lime co-founder Toby Sun said in a blog post announcing the deal that Uber had made a “sizable investment.”

Uber now offers bikes and scooters in eight U.S. cities through its app, while it plans to expand globally. Jump bikes will soon launch in Berlin.

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Bamidele Ogunberu

Bamidele Ogunberu

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