Ride-Hailing Company Lyft Sells its Self-driving Unit to Toyota's Woven Planet Holdings for $550 Million
【Summary】Ride-hailing company Lyft Inc is following in the footsteps of its primary rival Uber Technologies and will no longer develop its self-driving technology in house. The San Francisco-based company announced on Monday that its selling its autonomous driving unit Level 5 to Toyota subsidiary Woven Planet Holdings Inc (“Woven Planet”) for $550 million. Woven Planet is tasked with developing autonomous driving and other advanced mobility technology for Toyota.
Ride-hailing company Lyft Inc is following in the footsteps of its primary rival Uber Technologies and will no longer develop its self-driving technology in house.
The San Francisco based company announced on Monday that its selling its autonomous driving unit named Level 5 to Toyota subsidiary Woven Planet Holdings Inc ("Woven Planet") for $550 million. Lyft will receive $200 million paid upfront and $350 million of payments over a five-year period.
Lyft established its Level 5 autonomous driving division in 2017.
"This acquisition assembles a dream team of world-class engineers and scientists to deliver safe mobility technology for the world," James Kuffner, CEO of Woven Planet said. "The Woven Planet team, alongside the team of researchers at Toyota Research Institute, have already established a center of excellence for software development, automated driving, and advanced safety technology within the Toyota Group. I am absolutely thrilled to welcome Level 5's world-class engineers and experts into our company, which will greatly strengthen our efforts."
The transaction is also expected to remove $100 million of annualized non-GAAP operating expenses on a net basis - primarily from reduced R&D spend, which will accelerate Lyft's path to Adjusted EBITDA profitability.
Lyft launched its IPO in March 2019 and like rival Uber it's under pressure from investors to reach profitability. The company's stock was trading down 1% at $63.06 on Monday, but it was low as $21.34 last March when the global pandemic started. The stock reached $78.29 on the day of Lyft's IPO, but has never risen over that price in the past two years.
The transaction however could help boost its effort to deploy autonomous vehicles on its ride-hailing platform. The transaction also includes multi-year non-exclusive commercial agreements between Lyft and Woven Planet to accelerate the development and enhance the safety of automated driving technology.
"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," Lyft Co-Founder and President John Zimmer 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."
With the transaction, two outside companies have taken over the self-driving development of both Uber and Lyft, which are the two biggest ride-hailing companies in the U.S.
Uber sold off its Advanced Technologies Group (Uber ATG) for $4 billion in December 2020 to Silicon Valley startup Aurora. Uber transferred its entire 1,200-employee ATG unit to Aurora, a company co-founded by Chris Urmson, who once led Google's early self-driving car program that spun off into Waymo.
The two ride hailing companies were aiming to add self-driving vehicles to their respective platforms as a quicker path toward profitability, but have realized that developing self-driving technology in house is a difficult task without outside assistance.
By 2018, Uber's autonomous driving division Uber ATG was reported to be burning through $20 million per month rushing to develop self-driving technology to catch up with competitors, including Google's Waymo and General Motors' autonomous driving division Cruise.
The Level 5 team at Lyft will join Woven Planet, creating what Woven Planet says is one of the most diverse, well-resourced and talented groups in the field. Woven Planet is tasked with developing autonomous driving and other advanced mobility technology for Toyota.
"Both Woven Planet and Level 5 are focused on improving mobility through technology, bringing about a future that benefits people around the world. With this deal in place, I am very excited that the Level 5 team will be better positioned than ever to deliver on its long term mission to bring autonomous vehicles to market," said Luc Vincent, Executive Vice President, Autonomous Technology at Lyft.
Lyft's Open Platform team, which focuses on the deployment and scaling of third-party self-driving technology on the Lyft ride-hailing network, will become the new Lyft Autonomous team.
Lyft will benefit from the vast resources already assembled at Woven Planet. As part of the acquisition, Toyota will be able to use Lyft's ride-hailing and data platform to scale the technology.
Woven Planet and Lyft have already signed commercial agreements for the utilization of Lyft's system and fleet data to accelerate the safety and commercialization of the automated-driving vehicles that Woven Planet will develop for Toyota.
"Today's announcement launches Lyft into the next phase of an incredible journey to bring our mission to life," Lyft Co-Founder and CEO Logan Green said. "Lyft has spent nine years building a transportation network that is uniquely capable of scaling AVs. This partnership between Woven Planet and Lyft represents a major step forward for autonomous vehicle technology."
Woven Planet Group is an expansion of the operations of the Toyota Research Institute. The Group includes four companies, Woven Planet Holdings, Woven Core, Woven Alpha and Woven Capital. The four companies are developing autonomous driving technology, robotics, smart city technology, and more.
The transaction is expected to close in the third quarter of 2021, subject to the receipt of required regulatory approvals and customary and other closing conditions.
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