(ATF) US ride hailing service Lyft joined rival Uber in divesting itself of its autonomous driving division, selling it to a unit of Japan's Toyota for $550 million.
The ride-sharing companies are focusing on their core operations amid struggles during the year-long coronavirus pandemic.
The Lyft operations - known as Level 5 - will be folded into Woven Planet Holdings, a subsidiary of Toyota Motor Corporation. Woven Planet said it would create a team of 1,200 people working on self-driving technology in Japan, the United States and Britain.
Lyft will receive $550 million in cash, with $200 million paid upfront and $350 million of payments over a five-year period, under the agreement. "This acquisition advances our mission to develop the safest mobility in the world at scale," said Woven Planet chief executive James Kuffner.
"This deal will be key in weaving together the people, resources, and infrastructure that will help us to transform the world we live in through mobility technologies that can bring about a happier, safer future for us all."
HIT BY SLOWDOWN
Logan Green, Lyft chief executive, said the transaction "brings together the vision, talent, resources and commitment to advance clean, autonomous mobility on a global scale."
Both Lyft and Uber had been working on their own technology for autonomous cars, but the firms have been hit hard by the slowdown in ride-sharing during the global pandemic.
Lyft has long operated in the shadow of Uber, its larger competitor.
"While we like Lyft’s status as one of the major players in a duopolistic US ride-sharing market, and its prospects of fast revenue growth over the medium term, we think the company’s ability to sweat platform assets by cross-selling multiple services is limited," Anindya Das and Masataka Kunugimoto of Nomura said in a recent report.
"This, coupled with a relatively sub-scale business would impact long-term profitability, in our opinion," they added.
With reporting by Agence France-Presse