Toyota Motor Corp. has announced that the company will be investing $500 million in Uber Technologies Inc. for the development of driverless cars.
The announcement signals a shift in strategy; Uber initially planned to embark on self-driving initiatives on its own without help from external parties. According to a person briefed on the deal, the $500 million investment from Toyota will put Uber’s value at $76 billion.
The investment will be put toward the mass-production of driverless vehicles, which will be used in Uber’s ridesharing network. A joint press release from Toyota and Uber states that self-driving technology from both companies will be incorporated into purpose-built Toyota cars. The fleet of driverless vehicles will be based on Toyota's Sienna Minivan model and will be equipped with Toyota’s safety software, Guardian. Pilot trials are scheduled to begin in 2021.
Self-Driving Car Challenges
Uber’s self-driving program has come under scrutiny in the past. In March, one of the company’s self-driving SUVs struck down and killed a pedestrian in Tempe, Arizona. Immediately after, Uber removed driverless cars from the roads, although limited testing of Uber’s driverless cars is still ongoing in Pittsburgh.
The company has also been grappling with the pros and cons of developing self-driving cars in the first place; developing and operating the cars is extremely expensive, and Uber has been trying to cut costs in order to take the company public by next year. In August, it was reported that Uber was investing $1-2 million a day into autonomy work. Following news of the deal, shares in Toyota spiked.
The two companies have partnered in the past; in January, Toyota showcased a new driverless concept vehicle and announced at the International CES technology trade show that Uber would be one of its partners, along with Pizza Hut and Amazon.
And now, Toyota’s help — and shared financial burden in development and R&D — could be pivotal for Uber as they work to develop a safe, efficient network of driverless cars.
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