Toyota to invest $500 million in Uber for driverless cars

UPDATED: 8/27/18 9:32 pm ET - adds details

Toyota Motor Corp. will invest $500 million in Uber to jointly work on developing self-driving cars, the companies said on Monday, a bid by both to catch up to rivals in the hotly competitive autonomous driving business.

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, Ariz., in March, Uber has removed its robot cars from the road, laid off hundreds of test drivers and shuttered operations in Arizona, its autonomous testing hub.

The investment values Uber at $72 billion, matching the valuation Uber received in a deal with Alphabet Inc. self-driving unit Waymo this year.

The deal was reported earlier Monday by The Wall Street Journal.

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.

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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 will operate the Toyota autonomous fleet has not yet been chosen, Miller said.

Toyota has been less aggressive than some rivals on moving toward full-fledged autonomous driving, expressing caution about the technology, and has focused on partial autonomous systems like Guardian. But the company has invested in research and said it plans to begin testing self-driving electric cars around 2020.

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 told Reuters. 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.

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Toyota to invest $500 million in Uber for driverless cars

Heather Somerville
Reuters
August 27, 2018 20:43 CET

Toyota will invest $500 million in Uber to jointly work on developing self-driving cars, the companies said on Monday, a bid by both to catch up to rivals in the hotly competitive autonomous driving business.

Toyota and Uber Technologies, 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 robot cars from the road, laid off hundreds of test drivers and shuttered operations in Arizona, its autonomous testing hub.

The investment values Uber at $72 billion, matching the valuation Uber received in a deal with Alphabet self-driving unit Waymo this year.

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 automakers and enlisting a third party to own and maintain the fleet.

The third party that will operate the Toyota autonomous fleet has not yet been chosen, Miller said.

Toyota has been less aggressive than some rivals on moving toward full-fledged autonomous driving, expressing caution about the technology, and has focused on partial autonomous systems like Guardian. But the company has invested in research and said it plans to begin testing self-driving electric cars around 2020.

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 told Reuters. 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, in which the automaker 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.

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Driverless startup Zoox removes CEO

Zoox Inc., an autonomous driving startup recently valued at $3.2 billion, dismissed its CEO, Tim Kentley-Klay, after closing a massive financing round in July. Kentley-Klay tweeted on Wednesday that the firing came "without a warning, cause or right of reply." "Today was Silicon Valley up to its worst tricks," he wrote.

Jesse Levinson, the company’s other co-founder and chief technology officer, will be promoted to president, said a person familiar with the decision who asked not to be identified because the discussions are private. The person declined to offer an explanation for the move. Carl Bass, the former CEO of Autodesk and a Zoox board member, was named executive chairman for the company.

In an emotional missive on Twitter, Kentley-Klay criticized the board for their decision. "Rather than working through the issues in an epic startup for the win, the board chose the path of fear," he wrote, charging that the directors were "optimizing for a little money in hand at the expense of profound progress."

Zoox stood out in the crowded field of self-driving newcomers and corporate titans for its outsized ambition and financial backing. The four-year-old company, which has raised about $800 million to date, including $500 million in July, aims to create a fully driverless vehicle ready for the road by 2020. Bloomberg Businessweek recently profiled the young company’s rapid ascendance in Silicon Valley, which was driven largely by the unorthodox entrepreneurial zeal of Kentley-Klay, an Australian native with no prior automotive experience.

"We are a startup pitted against the biggest companies on the planet,” Kentley-Klay told Businessweek. “But we believe deeply that what we’re building is the right thing. Creativity and technical elegance will win here.”

Before starting Zoox, Kentley-Klay was offered a job with Google’s self-driving project, now called Waymo. He turned it down, and has touted Zoox’s strategy of building its own vehicles for full autonomy as wiser than the standard approach of retrofitting existing cars that Alphabet Inc.’s Waymo and others are taking.

The Zoox board, which includes Levinson, voted to oust Kentley-Klay, said the person familiar with the situation. A spokesperson for the company declined to comment.

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