Commentary

Uber Gets $500M From Toyota, Expands E-Bike, Scooter Initiative

Toyota is pumping $500 million into Uber, which will integrate self-driving technology that the two companies develop together into Toyota Sienna minivans.

“Uber has been seeking ways to lower development costs and losses in its autonomous-vehicle unit following a fatal crash involving one of its cars earlier this year in Arizona. Last year, the Uber division spent about $750 million on self-driving car development before making cuts this year, according to people familiar with the matter,” write the Wall Street Journal’s Greg Bensinger and Chester Dawson, who broke the story about the deal yesterday.

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“In recent months, Uber has closed its Arizona autonomous-vehicle operations and laid off about 400 test drivers, some of whom it will rehire after undergoing new training. Uber also has taken its self-driving vehicles off the roads in the San Francisco Bay Area, Pittsburgh and Toronto while investigators look into the circumstances of the Arizona crash,” they add.

Indeed, “Uber had to do something about its autonomous vehicle unit, which has been losing talent and costing Uber $1 million to $2 million a day, causing some investors to fret,” writes Amir Efrati for The Information.

He points out that “both companies have something to gain. Uber could give Toyota a way into city and suburban robotaxis. To date, Toyota primarily has been working on autonomous features for privately owned vehicles. It’s worth noting that Toyota’s autonomous vehicle chief Gill Pratt has cautioned about self-driving cars, saying they are much further away from reality than most people think.”

“The fleet will also be equipped with Toyota’s safety software, called Guardian, and will pick up passengers on Uber’s ride-hailing network. The companies anticipate starting a pilot program by 2021,” writes Kate Conger for the New York Times.

Toyota is becoming “one of three OEMs linked with Uber. In August 2016, Uber signed a $300 million deal with Volvo to develop self-driving vehicles and announced plans in late 2017 to buy 24,000 XC90 SUVs from the Swedish company. And in January 2017, Daimler (which owns Mercedes-Benz) revealed that it plans to eventually use Uber's network to offer rides in autonomous vehicles that it is developing,” Cyrus Farivar reports for Ars Technica.

“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,” Toyota Executive Vice President Shigeki Tomoyama says in a press release issued after news of the deal surfaced.

Meanwhile, Uber CEO Dara Khosrowshahi tells the Financial Times’ Shannon Bond that there are better ways to get around inner cities than hailing an Uber, which is why it is investing in e-bikes and scooters.

“During rush hour, it is very inefficient for a one-ton hulk of metal to take one person 10 blocks,” Khosrowshahi says in an interview published Sunday. “We’re able to shape behavior in a way that’s a win for the user. It’s a win for the city. Short-term financially, maybe it’s not a win for us, but strategically long term we think that is exactly where we want to head.”

You may recall that Uber bought Jump, a dockless, GPS-enabled bike-sharing service based in Brooklyn, N.Y., in April. It has expanded Jump from San Francisco and Washington, D.C. to eight U.S. cities and will soon launch in Berlin, Germany.

“Khosrowshahi, who joined Uber a year ago, has also struck deals with Lime, an electric scooter company, and Masabi, a London-based app that provides mobile ticketing for public transport, with the aim of building what he calls an ‘urban mobility platform,’” Bond adds.

He’s not the only ride-hailing-app executive thinking this way.

“In a post last month, Lyft’s co-founders wrote about using bikes and scooters for the first- and last-mile problem: those shorter trips from the train station to the office, for instance,” Mashable’s Sasha Lekach points out.

Not only that, Lyft’s John Zimmer and Logan Green put a long-term spin on the issue: “Improving people’s lives with the world’s best transportation isn’t just Lyft’s mission: we consider it our life’s work,” they wrote.

So, too, does Uber’s Khosrowshahi: “We are willing to trade off short-term per-unit economics for long-term higher engagement,” he tells Bond. “I’ve found in my career that engagement over the long term wins wars and sometimes it’s worth it to lose battles in order to win wars.”

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