Toyota to invest in Uber
Japanese carmaker Toyota has said it's pumping a half-billion dollars into US ride-hailing company Uber to develop self-driving vehicles. The investment will help both sides compete with market leader Google's Waymo.
An autonomous car is a vehicle that is capable of sensing its environment and navigating without human input. Autonomous cars combine a variety of techniques to perceive their surroundings, including radar, laser light, GPS, odometry, and computer vision. Advanced control systems interpret sensory information to identify appropriate navigation paths, as well as obstacles and relevant signage.
The potential benefits of autonomous cars include reduced mobility and infrastructure costs, increased safety, increased mobility, increased customer satisfaction, and reduced crime.
The investment values Uber at $72 billion, matching the valuation Uber received in a deal with Alphabet Inc.’s self-driving unit Waymo this year.
Toyota, one of the world’s largest carmakers, and Uber Technologies Inc., the leading ride-hailing service, are widely seen as lagging the competition in developing self-driving cars. The partnership deepens an existing relationship and reflects CEO Dara Khosrowshahi’s strategy of Uber developing autonomous vehicles through partnerships, rather than on its own.
The deal also breathes new life into Uber’s self-driving business. Since a self-driving Uber SUV killed a pedestrian in Tempe, Arizona, in March, Uber has removed its autonomous cars from the road, laid off hundreds of test drivers and shuttered operations in Arizona, its testing hub for the vehicles.
Uber will combine its autonomous driving system with Toyota’s Guardian technology, which offers automated safety features such as lane keeping but does not enable a vehicle to drive completely autonomously. The combined technology will be built into Toyota’s Sienna minivans, to be deployed on Uber’s ride-hailing network starting in 2021, Uber said.
The companies’ aim is to solve the enormously challenging problem of how to mass-produce self-driving cars for shared fleets, including ride-hailing services.
Jeff Miller, Uber’s head of business development for strategic initiatives, said the partnership “really paints the picture of how we envision deploying autonomous technology in the long term.” That includes licensing its autonomous technology to carmakers and enlisting a third party to own and maintain the fleet.
The third party that who will operate the Toyota autonomous fleet has not yet been chosen, Miller said.
A Toyota official said the company would continue its research into self-driving technology and that it would not combine its research efforts with Uber.
Uber has admitted its technology lags Waymo, and the crash in Arizona was a further setback in development and testing. The Toyota partnership puts pressure on Uber to resume testing on public roads, but the company has run up against regulators and politicians with safety concerns. Miller said Uber plans to have autonomous cars back on public streets by the end of the year.
Khosrowshahi, who took over Uber a year ago, has recently explored options that include more partnerships as well as a potential sale of the self-driving business, separate sources have said. The self-driving unit is a significant contributor to Uber’s losses, which in the second quarter were $891 million.
Uber has a deal to purchase cars from Volvo, outfit them with Uber’s technology and maintain them, a more labor-intensive project than the Toyota plans. The company also has a partnership with Daimler AG, in which the carmaker proposes to put its own self-driving cars in Uber’s ride-hailing network.
Khosrowshahi’s partnership strategy is a shift. Uber co-founder and former CEO Travis Kalanick had insisted on developing a proprietary self-driving system and called autonomous cars “existential” to Uber.
Previously, Uber and Toyota partnered on an electric mobility project. Two years ago, Toyota invested an undisclosed sum in Uber and the two companies partnered on a car-leasing program for Uber drivers. Uber has since shuttered its U.S. leasing business.
Dara Khosrowshahi, the chief executive of Uber, said it was the first deal of its kind for the firm.
“Our goal is to deploy the world’s safest self-driving cars on the Uber network and this agreement is another significant step towards making that a reality. Uber’s advanced technology and Toyota’s commitment to safety, and its renowned manufacturing prowess make this partnership a natural fit,” he said.
Our assessment is that Uber's troubled self-driving car efforts are in need of external help, and this deal with Toyota might provide that expertise. We feel that sharing the burden, and R&D cost will delight Uber's investors as it aims for its initial public offering next year.