Ride-hailing firm Lyft sells self-driving tech unit to Toyota for $550m

FILE PHOTO: A Toyota logo is displayed at the 89th Geneva International Motor Show in Geneva, Switzerland, March 5, 2019. REUTERS/Denis Balibouse/File Photo

Lyft Inc will sell its selfdriving technology unit to Toyota Motor Corp in a $550 million deal, the companies said on Monday, allowing the ride-hail company to hit its profitability target one quarter earlier.

The sale of Level 5 to Toyota‘s Woven Planet division will allow Lyft to focus on partnerships with selfdriving companies that want to deploy their technology on its platform, rather than develop costly technology that has yet to enter the mainstream.

Lyft will receive $200 million cash upfront, with the remaining $350 million paid over five years, the companies said. The deal is expected to close in the third quarter.

Lyft did not immediately say how it plans to invest the funds. But the sale will allow Lyft to report third-quarter profit on an adjusted basis of earnings before interest, taxes, depreciation and amortization as long as the company continues to recover from the coronavirus pandemic, it noted.

The sale will also remove $100 million in annual net operating costs, Lyft said.

Woven Planet, which Toyota set up in January to develop connected vehicle, autonomous and semi-autonomous driving technology, will take over all of the more than 300 employees of Level 5.

The deal marks Toyota‘s latest foray into ride-hailing at a time of growing consolidation in the capital-intensive selfdriving industry. The Japanese automaker already owns a stake in China’s top ride-hailing firm Didi Chuxing and Southeast Asia’s Grab.

It also owned a stake in the selfdriving unit of Lyft‘s larger rival Uber Technology Inc, but transferred the stake when Uber sold the unit in December to car startup Aurora at a steep drop in valuation.

Toyota said in February it would develop and build autonomous minivans for ride-hailing networks with Aurora and longtime supplier partner Denso Corp.

Lyft‘s sale allows it to offload cash-burning side businesses and focus on reviving their core divisions following a bruising pandemic year.

Lyft will now focus on what it can do best with autonomous vehicles by offering services such as routing, consumer interface and managing, and maintaining and cleaning partners’ autonomous vehicle fleets, which could mean added revenue, it said.

Lyft already allows consumers to book rides in selfdriving vehicles in select cities in partnerships with Alphabet Inc’s Waymo and Motional, the joint venture between Hyundai Motor Co and Aptiv.

It will continue to collect real-world driving data through some 10,000 vehicles it rents out to consumers and ride-hail drivers. The data is valuable for the development of selfdriving vehicles that Woven Planet will have access to under the deal.

But Lyft also believes human ride-hail drivers will remain important for the foreseeable future to serve customers during peak demand periods, bad weather, or in areas that selfdriving cars are unable to navigate.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.