Akio Toyoda, president of Toyota. Picture: BLOOMBERG
Akio Toyoda, president of Toyota. Picture: BLOOMBERG

San Francisco/Tokyo — Toyota Motor is investing $500m more in Uber Technologies, underscoring the Japanese carmaker’s efforts to catch up on self-driving technology as General Motors and Alphabet’s Waymo lead the race to upend the industry.

As part of the accord announced on Monday, Toyota plans to manufacture Sienna minivans loaded with Uber’s software, with testing slated to begin on Uber’s ride-sharing network in 2021.

Toyota’s stake is set to value the ride-hailing company at $76bn, according to a person familiar with the matter, who asked not to be identified because the details are private.

The 81-year-old manufacturer is accelerating a push to transform into a mobility-services provider, with CEO Akio Toyoda warning that a once-a-century paradigm shift in the industry has become a life-or-death battle for traditional carmakers.

Uber isn’t Toyota’s only investment in a ride-sharing company — it poured $1bn into Southeast Asia’s Grab earlier this year and has a partnership with China’s Didi Chuxing.

Toyota is also a backer of Japan Taxi, an Uber rival run by the chairman of Tokyo’s biggest taxi operator.

Carmakers and technology companies alike are working towards a future where autonomous robo-taxis will lessen the need for individual car ownership.

The Toyota City-based company, which initially bought a small stake in Uber in 2016, is spreading its bets far and wide for a shot at these nascent technologies.

Toyoda has said there are "no nautical charts for us to follow" in plotting the course to future mobility.

Uber and Didi are also partnering with Toyota in the carmaker’s vision for a fleet of autonomous, modular boxes on wheels that can be customised to transport anything from people to pizza.

CEO Toyoda unveiled the concept, dubbed e-Palette, at CES in Las Vegas in January. Amazon.com and Pizza Hut also signed on.

Toyota’s expanded foray aligns it with Japanese internet giant SoftBank, which is already among the biggest backers of the main ride-hailing companies: Uber, Didi and Grab.

SoftBank founder Masayoshi Son has sunk as much as $9.5b into Didi, led investments worth $9.3bn in Uber and $4bn in Grab, and owns a stake in India’s Ola.

SoftBank’s Vision Fund is also an investor in GM’s Cruise autonomous-car unit and Manbang Group, China’s Uber-like truck-rental company.

Technology companies need carmakers to bring their disruptive ideas to fruition. Carmakers bring the knowledge of how to build a car and the factories to do it. What they lack is the legions of software engineers that technology companies possess.

Need partners

"Since 2015, we’ve been working to bring safe, reliable self-driving technology to the Uber network," Eric Meyhofer, head of Uber’s Advanced Technologies Group, wrote in a blog post on Monday afternoon. "We knew we couldn’t do it alone, which is why we continue to partner with world-class vehicle manufacturers to make our vision a reality."

Uber and Toyota expect that the mass-produced autonomous vehicles will be owned and operated by a third-party company they mutually agree on, according to the carmaker.

The deal with Toyota raises Uber’s valuation and matches the value of shares given to Waymo after Uber settled a lawsuit over self-driving cars. A group of investors had valued Uber at $62bn earlier this year.

Incentives

Toyota’s relationship with Uber stretches back to at least 2013, when Uber drivers started to get discounted financing on Toyota cars. As with traditional rental companies like Avis Budget Group, Toyota is trying to sell Uber fleet-management services based on the rapidly expanding volume of data it’s collecting from connected cars. These services include being able to monitor whether a car is being properly maintained or driven too aggressively.

"Nobody knows what kind of business opportunities the sharing economy will create, so for now Toyota feels like it needs to just get that know-how," said Koji Endo, an auto analyst at SBI Securities in Tokyo.

"They don’t know what kind of return the company can expect on its $1bn investment in Grab. It’s like they’re groping in the dark."

Toyota has stuck with Uber even after one of the ride-hailing company’s autonomous Volvos hit and killed a woman in Tempe, Arizona in March, in what is thought to be the first pedestrian death linked to a self-driving vehicle.

Public road testing of the cars is still on hold following the incident, in which Uber had deactivated Volvo’s automatic braking system.

Safety net

In the current venture, Toyota’s own autonomous driving system, which uses banks of sensors to anticipate what other vehicles and pedestrians are doing in a wide space around the vehicle, will function as a safety net alongside Uber’s self-driving software.

In a separate partnership on self-driving vehicle development announced in January, a Toyota spokesman said Uber would not turn off the carmaker’s built-in safety features.

Uber has developed a three-pronged self-driving strategy.

For one, Uber purchased Volvos, retrofitted the cars with its self-driving technology and operates the fleet on its own.

In another, Daimler will own and operate its own self-driving cars on Uber’s network.

The deal with Toyota becomes a third pillar, where Uber licenses its technology.

CEO Dara Khosrowshahi is looking to stabilise Uber following March’s fatal crash and a year of corporate scandals that saw the share price swing more widely than a typical privately held company.

He has made it a priority to fix a corporate culture tainted by allegations of sexual harassment and questionable business practices, and just days ago named a new chief financial officer following a three-year search ahead of a prospective public offering next year.

Bloomberg

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