Toyota subsidiary Woven Planet and ride sharing company Lyft have signed a $550 million acquisition deal that will see the former purchase the latter's autonomous vehicle division, Level 5.
Under the deal, Level 5 will be folded into Woven Planet, ending Lyft's efforts to build its own self-driving systems after launching it in 2017.
Lyft will receive approximately $550 million in cash for the transaction, with $200 million to be paid upfront. The remaining $350 million will be paid over five years.
According to Lyft, the deal is expected to remove $100 million of annualised non-GAAP operating expenses on a net basis. The savings from a reduction in R&D spend, according to Lyft co-founder and president John Zimmer, will help the company achieve its profitability goal.
"Not only will this transaction allow Lyft to focus on advancing our leading autonomous platform and transportation network, this partnership will help pull in our profitability timeline," he said.
"Assuming the transaction closes within the expected timeframe and the COVID recovery continues, we are confident that we can achieve adjusted EBITDA profitability in the third quarter of this year."
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The deal also includes multi-year non-exclusive commercial agreements between the two companies where Woven Planet will use Lyft's system and fleet data to improve the development and safety of its self-driving vehicles.
The transaction is expected to be finalised by the third quarter of 2021, subject to regulatory approvals.
In selling off Level 5, Lyft said it will also make structural changes to its organisation, such as its Open Platform team, which focuses on deploying and scaling third-party self-driving technology on the Lyft network, to 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 AV partners scale deployment with the highest revenue per mile at the lowest cost per mile. We look forward to continuing to partner with the best autonomous vehicle companies to bring this technology to market," Lyft co-founder and CEO Logan Green said.
Toyota has been slowly building out its autonomous vehicle business for the last couple of years. Back in 2018, the Japanese conglomerate formed a $2.8 billion autonomous vehicle research venture to accelerate R&D of "fully-integrated, production-quality software for automated driving".
In the same year, it invested $500 million in ride-sharing giant Uber. Under the partnership, Uber was integrating its self-driving technology with Toyota's automated safety support system, Toyota Guardian, for purpose-built vehicles to be deployed on Uber's network. At the time, pilots were slated to begin this year.
Toyota at the time also formed a joint venture with Softbank. The pair agreed that under the JV, Toyota's vehicles would paired with SoftBank's software to create autonomous vehicles that were due to be available by the "second half of the 2020s".
In other autonomous vehicle news, Tesla recently admitted to the California DMV that its self-driving software is only a level 2 automation, despite Elon Musk touting last year that the company's autonomous vehicles were "very close" to achieving level 5.
Level 2 autonomous vehicles still require a driver behind the wheel whereas at level 5, a vehicle's computer does all the driving and a driver is not required.
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