Toyota’s pact to invest $500 million in Uber to expedite the push to get self-driving cars on the road, improve safety and reduce transportation costs is another nice feather in the ride-hailing company’s cap, but what investors are really looking at here is the whopping $72-billion valuation the deal gave Uber.
Expanding its partnership with Uber, Toyota Motor Corp. has signed an agreement for a $500 million investment to integrate Uber's self-driving technology into Toyota Sienna minivans for use in Uber's ride-hailing network, with the first pilots scheduled for 2021.
“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,” said Shigeki Tomoyama, president of Toyota Connected Company.
But the big news is this: The deal values Uber at about $72 billion which is $10 billion more than earlier this year when a SoftBank Group funding round valued Uber at $62 billion.
Beyond valuation, Uber is hailing the deal as a major milestone as it seeks to be in the driver’s seat of our alternate transportation reality.
“The deal is the first of its kind for Uber, and signals our commitment to bringing world-class technologies to the Uber network," said Uber CEO Dara Khosrowshahi. "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. I look forward to seeing what our teams accomplish together."
It’s not Toyota’s first rendezvous with Uber, either. Surely, many have wondered why so many Uber drivers are behind the wheel of a Toyota, or why every time you hail an Uber it seems to be a Camry?
The Japanese giant cut a $300 million auto-leasing deal with the San Francisco-based company in 2016. That investment made it possible for Uber drivers to lease their vehicles from Toyota and cover their payments through earnings generated as Uber drivers.
But Uber’s also made deals with other auto giants, including Volvo and Daimler. Related: Is This What Has Kept Gold Prices Low?
Purchasing as many as 24,000 Volvo SUVs to be delivered between 2019 and 2021, Uber will retrofit the cars with its self-driving technology and operate it as its own fleet.
Another deal is with Daimler AG, which will own and operate its own self-driving cars on Uber's network.
In its latest deal with Toyota, Uber will licenses its technology to the Japanese auto giant.
It’s a three-part strategy designed to come at self-driving from all angles.
But Uber still believes that our driving future is automated, and that self-driving is the company’s raison d’etre. Ride-hailing was just an introduction into the market—even if it has been a very rough ride.
Not only did one of Uber’s self-driving vehicles hit and kill a woman in Arizona, leading to suspended testing on public roads and the closure of Uber’s Arizona operations, but a very expensive battle with Alphabet’s Waymo over trade secrets ended in a $245-million settlement. It also led Uber to park its robotic trucks after spending some $925 million on the project before deciding to focus instead on self-driving cars.
In Q2, Uber recorded a slowdown in growth from the previous quarter. Revenues were up 51 percent from the same quarter last year, and gross bookings were up 41 percent year-over-year (compared to 67 percent and 55 percent, respectively, for Q1). Adjusted net loss increased in Q2 to $659 million, up from $577 million in the first quarter.
But they’re hoping the Toyota investment will be one of many pushes to profit.
Toyota, too, is very serious about self-driving cars. The Japanese company announced in March that it was setting up a $41-billion AI outfit called the Toyota Research Institute-Advanced Development (TRI-AD) to develop self-driving cars and robot helpers, the Wall Street Journal reported.
Toyota also plans to build a gigantic 60-acre facility in Michigan to test “edge case” driving scenarios with its autonomous vehicles that are too dangerous to perform on public roads.
Toyota and Uber are not the only ones with a keen eye on the future of driving.
General Motors invested $500 million in ride-hailer Lyft Inc in 2016 to jointly develop autonomous cars. Fiat Chrysler is providing some vehicles used by Waymo autonomous car program, and it’s also joined forces with BMW Group and Intel to develop technology for a self-driving car by 2021.
In the meantime, with its new $72-billion valuation, everyone wants to know when Uber will go public. The Uber IPO has been anticipated for some time, but most indications that it would be next year. But while that’s had investors’ mouths watering, Uber’s newly appointed CFO, Nelson Chai, has recently dashed those hopes, saying he’s “not on board yet” with a 2019 IPO.
By Damir Kaletovic for Safehaven.com
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