Commercializing autonomous vehicle technology is costly and lengthy.
Lyft is selling its autonomous car unit to Toyota for $550 million.
The two companies reached an acquisition agreement on Tuesday. The Level 5 division of Lyft will go to Toyota’s Woven Planet Holdings.
The ride-hailing company will get $200 million upfront. The remaining $350 will be paid in more than 5 years.
Level 5 has an estimated 300 people. They will be integrated into the team of Toyota’s Woven Planet. Toyota has a 175-acre site in Japan to test autonomous vehicles.
In 2017, Lyft launched its self-driving division to develop its own autonomous ride-hailing technology. At that time, Lyft wanted car manufacturers to bring in a fleet of self-driving cars to its network.
The deal will end the four-year effort of Lyft to develop its self-driving system. It also stops a costly yearly expense from the ride-hailing company’s budget.
By removing its Level 5, it’s also getting rid of $100 million yearly operating expenses.
The significant savings is vital for Lyft as it wants to be more profitable.
However, Lyft didn’t comment on how it will invest the funds.
Lyft’s rival, Uber Technologies, Inc., announced that its self-driving division will be sold to Aurora, a car startup.
Just like Lyft, the selling of Uber’s self-driving division will offload its cash-burning side business. It will help the company focus on its core divisions after a pandemic year.
Lyft, on the other hand, will focus on the best things it could do with autonomous vehicles by providing services like maintaining partner’s autonomous car fleets.
The acquisition will help accelerate the development of driving technology and improve its safety. It will also not affect Toyota’s partnership with other companies, like Aurora.
Lyft lets consumers book rides in its self-driving cars in some cities through its partnership with Waymo and Motional, which is a joint venture of Hyundai and Aptiv.
The company states that it will continue to gather driving data through the 10,000 cars it rents out to drivers and consumers. The data are vital in the development of self-driving cars. And Woven Planet can access them under the deal.
However, Lyft still believes that human drivers will remain vital to serve its customers during peak periods or in areas that self-driving cars can’t navigate.
Lyft Drivers Shortage
Meanwhile, Lyft is easing the shortage of US drivers by offering them bonuses and extra pay.
Drivers are slow in returning to the platform. There can be several reasons for this issue. One is the arrival of government stimulus money. Another reason is the growing concerns of health and safety.
Many drivers have found new jobs since the demand for ride-hailing fell because of lockdowns.
The shortage affected many users who were accustomed to waiting for their rides in a few minutes. Now, they have to deal with long waits.
Some customers are thinking if the Lyft drivers were on strike. Others said that the fares increased significantly.