Uber’s autonomous technology arm is being split off into its own entity, following a $667 million investment from Toyota parts supplier DENSO and $333 million investment firm Softbank Vision Fund (SVF).
- Uber has received a recent investment from Toyota and partners totaling $1 billion.
- Uber will spin-off its Advanced Technologies Group
- The split will make Uber look closer to profitable for its upcoming IPO
- Toyota is likely to gain a technological jumpstart to its own autonomous program
In a recent press release, the ridesharing firm Uber revealed that following a combined $1 billion investment in its Uber Technologies Inc.’s Advanced Technologies Group (Uber ATG), it would be splitting off ATG into its own company valued at $7.25 billion.
This announcement follows a $500 million investment Toyota made into Uber in August, 2018. At that time, the two companies agreed to partner to bring automated versions of Toyota’s Sienna minivan to Uber’s ridesharing market in a 2021 test-pilot program.
“This investment and our strong partnership with the Toyota Group are a testament to the incredible work of our ATG team to date, and the exciting future ahead for this important project, alongside great partners,” Dara Khosrowshahi, CEO of Uber said in a prepared statement. “The development of automated driving technology will transform transportation as we know it, making our streets safer and our cities more livable. Today’s announcement, along with our ongoing OEM and supplier relationships, will help maintain Uber’s position at the forefront of that transformation.”
Splitting Uber ATG off into its own entity is more than an investment in safe and livable cities, though. It’s also a wise financial decision for Uber, which posted $1.85 billion loss for 2018. A portion of those losses came from the capital-heavy ATG arm. Eying its looming IPO, Uber is keen to make itself appear as financially stable as possible. Getting ATG off its books is a quick way to do that.
This isn’t the first ridesharing investment Softbank or Toyota have made together. The firms both put money — $1 billion from Toyota — into a Southeast Asian ride-hailing company called Grab last year. Notably, Uber already owns 23% of Grab.
It’s interesting that an automotive juggernaut like Toyota doesn’t feel that it can compete with and/or beat Uber. And that it has opted to join them instead of beat them. Why spend the money to reinvent the wheel, when you can buy it from someone else?