Toyota, Uber, and Half a Billion Dollars Are Going to Change Driving as We Know It

Ever since Uber started its self-driving car program back in 2015, it has worked on developing its own driverless technology, as well as strived to operate its own autonomous vehicle fleet. However, the ride-hailing giant is now shifting away from that strategy.

It was announced on Monday that Uber Technologies Inc. is deepening its relationship with the Japanese carmaker Toyota by striking a self-driving car partnership that would aim to incorporate high-end technology from both companies into Toyota vehicles that are set to be deployed all across Uber’s ride-hailing network.

Toyota Motor Corp. is to invest $500 million in Uber, which would value Uber at $72 billion. This investment matches the Uber valuation from Alphabet Inc. (Google’s parent company) when they stroke a deal for a self-driving technology development company Waymo, an Alphabet Inc.’s subsidiary.

Uber’s autonomous driving system is set to be combined with Toyota’s safety software named Guardian, which provides various safety features, such as lane-keeping, but doesn’t enable completely autonomous driving. This combined technology will be incorporated into Toyota’s Sienna minivans and is planned to hit the streets in 2021.

A Promising Self-Driving Car Partnership between the Two Giants

Toyota and Uber first started collaborating in 2016, when they joined forces on an electric mobility project. They also signed a deal regarding vehicle leasing options for Uber drivers. However, Uber has since shut down its U.S. leasing business. Now, this new partnership truly stands out and many agree that it looks very promising.

In January, at the International CES technology trade show, when Toyota unveiled its new driverless vehicle and announced that Uber, Amazon and Pizza Hut would be its partners in the new and exciting self-driving venture, everyone instantly knew that something incredible must be cooking under the hood.

The leading ride-hailing service and one of the world’s largest carmakers have not really been keeping up with the competition when it comes to developing self-driving vehicles. Toyota’s CEO, Akio Toyoda, recently stated that the carmaker’s future is at stake given today’s revolution of transportation.

The Japanese carmaker has been lagging behind the competition primarily because it was concerned about full-fledged autonomous driving, which is precisely why it focused its efforts on partial autonomous systems, such as its safety software Guardian.

However, the company now plans to continue its self-driving technology research (which will not be combined with Uber’s research) and not start testing self-driving electric cars until 2020.

On the other hand, Uber faced some serious challenges along the way. The ride-hailing giant pursued developing and operating a fleet of autonomous vehicles on its own, which led to a fatal crash that caused a huge number of doubts about the safety of Uber’s self-driving system.

In March, an Uber’s self-driving SUV struck and killed a woman pedestrian in Tempe, Arizona, after which Uber pulled away all its autonomous cars from the road, laid off hundreds of test drivers and pulled the brakes on its self-driving testing hub in Arizona.

This incident that put Uber under scrutiny led the company to start considering a shift in strategy and carefully take the next steps for the company’s autonomous driving project. The co-founder and former CEO of Uber, Travis Kalanick, said that self-driving cars are “existential” to Uber.

The CEO of Uber, Dara Khosrowshahi said in a statement on Monday: “The deal is the first of its kind for Uber and signals our commitment to bringing world-class technologies to the Uber network. Our goal is to deploy the world’s safest self-driving cars on the Uber network, and this agreement is another significant step towards making that a reality”.

“Uber’s advanced technology and Toyota’s commitment to safety, and its renowned manufacturing prowess make this partnership a natural fit”, Khosrowshahi added.

The partnership will breathe new life into Uber and help Toyota challenge its competition. Uber’s head of business development for strategic initiatives, Jeff Miller, stated in an interview that the Toyota partnership “really paints the picture of how we envision deploying autonomous technology in the long term”.

“I think there’s going to be very large, multibillion-dollar businesses to be built on fleet operations,” he added. He also added that the fleet of autonomous vehicles will be “owned and operated by mutually agreed-upon third-party autonomous fleet operators”, but that the third party hasn’t been chosen yet.

Apart from Toyota, Uber has a deal with Volvo. It owns a large fleet of Volvo vehicles and plans to implement its technology into the vehicles and maintain them. However, the entire program is still being extensively tested and reviewed for safety, which resulted from the deadly car crash. Nevertheless, Uber still continues testing its autonomous vehicles in Pittsburgh, but to a limited degree.

“Over time, Uber will transit from the business model we have with Volvo, where we are owning and operating our fleet, to this kind of partnership, where Uber is the technology provider,” said Jeff Miller.

Also, Uber and Daimler joined forces on self-driving cars. Daimler is in the process of developing its own technology for self-driving cars, which it aims to deploy on Uber’s ride-hailing network. This partnership, however, is not exclusive, so Daimler could provide other companies like Uber with its technology.

When asked about the latest partnership with Uber, Shigeki Tomoyama, executive vice president of Toyota Motor Corp., said: “This agreement and investment marks an important milestone in our transformation to a mobility company as we help provide a path for safe and secure expansion of mobility services like ride-sharing that includes Toyota vehicles and technologies.”

Summing up

This self-driving car partnership between Toyota and Uber is definitely one of Toyota’s greatest steps towards a safe and lucrative future, but it is also a huge step forward for Uber. It can help Uber revive its autonomous driving business after the fatal incident that put the company under the spotlight and resulted in major losses.

We have to wait until 2021 to take a closer look at the end result of this promising partnership and perhaps even take Toyota’s Sienna minivan for a spin but, hopefully, it will be worth the wait.