Toyota bets big on Uber
Uber has had a pretty bad year. The company’s reputation has been rocked by everything from sexual harassment lawsuits to claims that it stole technology from Google to its self-driving car being involved in a fatal collision. In addition, the company posted losses of US$4.5bn in 2017.
All in all, a stressful time for the people in charge; luckily for them Toyota has arrived on the scene with some good news. A US$500m investment from the Japanese carmaker into Uber’s self-driving car programme will deepen ties between the two companies and allow them to catch up with rivals in the emerging market.
The new investment values Uber at more than US$70bn and aims to use technology from both companies and deploy purpose-built Toyota vehicles across Uber’s ride sharing network by 2021. This is a big ask, but both sides of the deal are feeling optimistic.
The executive vice president of Toyota, Shigeki Tomoyama, 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.”
Following the aforementioned fatal crash involving a self-driving Uber vehicle, the company withdrew all its autonomous cars from the road, fired hundreds of test drivers and closed its self-driving test hub in Arizona, USA. The deal with Toyota is Uber’s first major move back into this market it temporarily abandoned and will be vital for its future.
Autonomous vehicles represent an existential threat to Uber. The company currently thrives by offering artificially cheap prices to aggressively undercut traditional taxi firms in an attempt to drive them out of business. Then, when Uber is the only major player in the field, it hopes to implement a full self-driving fleet and remove the need for drivers completely, thereby cutting costs to the absolute minimum they can possibly be, in a field in which it no longer has any competitors.
Conversely, if Uber does not manage to be at the forefront of this market then someone else will get there first and almost certainly drive them out of business for good. The stakes are high and Uber is playing the game in just about the most ruthless way possible.
Toyota betting big on Uber therefore becomes something much more interesting than a normal investment and the progress of this deal will be one to keep an eye on in the future.