Woven Planet, a subsidiary of Toyota, and Lyft, a ride-sharing company, have signed a $ 550 million acquisition agreement that will see the former buy out the autonomous vehicles division of the latter, Level 5.
As part of the deal, Level 5 will be integrated with Woven Planet, ending Lyft’s efforts to build its own autonomous driving systems after launching them in 2017.
Lyft will receive approximately $ 550 million in cash for the transaction, of which $ 200 million will be prepaid. The remaining $ 350 million will be paid over five years.
Lyft aims for profitability by refocusing on its transportation network
According to Lyft, the transaction is expected to cut $ 100 million in annualized non-GAAP operating expenses on a net basis. According to John Zimmer, co-founder and president of Lyft, the savings from reduced research and development expenses will help the company meet its profitability target.
“Not only will this transaction allow Lyft to focus on developing its stand-alone platform and transportation network, this partnership will help us meet our profitability schedule,” he said. “Assuming the deal completes on schedule and the recovery continues, we are confident that we can achieve profitability on Adjusted EBITDA in the third quarter of this year. “
The agreement also includes multi-year, non-exclusive commercial agreements between the two companies, under which Woven Planet will use data from Lyft’s system and fleet to improve the development and safety of its autonomous vehicles.
The transaction is expected to be finalized by the third quarter of 2021, subject to regulatory approvals.
Toyota is climbing the steps in the autonomous car market one by one
By selling Level 5, Lyft says it is also making structural changes to its organization, such as its Open Platform team, which is focused on deploying and scaling third-party autonomous driving technology on the Lyft network, which will be now known as the Lyft Autonomous Team.
“With Lyft Autonomous, we can combine the power of Lyft’s hybrid network, marketplace engine, and fleet management capabilities to help our autonomous vehicle partners scale deployment with the highest revenue per mile to lowest cost per kilometer. We look forward to continuing to partner with the best autonomous vehicle companies to bring this technology to market, ”said Logan Green, co-founder and CEO of Lyft.
Toyota has slowly grown its autonomous vehicle business over the past two years. In 2018, the Japanese conglomerate established a $ 2.8 billion autonomous vehicle research firm to accelerate research and development of “fully integrated production quality software for automated driving.” . That same year, it invested $ 500 million in ride-sharing giant Uber. As part of the partnership, Uber has integrated its automated driving technology with Toyota’s automated safety assistance system, Toyota Guardian, for purpose-built vehicles that will be deployed on the Uber network.
At the time, Toyota also formed a joint venture with Softbank. The two companies have agreed that, as part of the joint venture, Toyota vehicles will be paired with SoftBank software to create self-driving vehicles that are expected to be available in the “second half of the 2020s.”