Toyota-Uber Partnership Should Play to Strengths

Stephen Lawson

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30th August 2018

Uber’s new partnership with Toyota, in which they plan to put self-driving cars on the road in a pilot by 2021, may be a step in the right direction for the ride-hailing company’s autonomous vehicle initiative.

The companies have announced they will combine Uber’s self-driving software with Toyota’s Guardian AI-based crash-avoidance system on a fleet of “Autono-MaaS” (mobility-as-a-service) Toyota Sienna minivans. The vehicles will operate on Uber’s ride-hailing network but will be owned by a third party. Additional models are expected to follow.

In what the two companies called a separate development, Toyota will also invest $500M in Uber. The alliance suggests Uber is shifting away from the relatively independent approach that has characterized its autonomous vehicle program. While the company has had AV partnerships and tested its platform on automakers’ existing models, such as the Volvo XC90, it mostly has owned the fleets and the self-driving technology.

In fact, in the aftermath of the fatal March crash of an Uber test vehicle in Arizona, investigators found Uber had turned off the automatic braking system built into the XC90 involved in the accident.

The Sienna minivans will be explicitly designed to use both the Uber Autonomous Driving System and Guardian, which monitors hazards outside a vehicle and the driver’s attention inside and can warn drivers of impending dangers. The two systems will work independently to maximize the safety of the vans, Toyota said. The fleet will also use Toyota’s MSPF (Mobility Services Platform), a core information infrastructure for connected vehicles.

Uber has been considering a change in direction for its AV division, the Uber Advanced Technologies Group, according to a report last week by The Information. It might sell the business or hand it over to another company in exchange for that partner putting its AVs on Uber’s ride-hailing network, the report said.

The new Toyota partnership falls short of such a game-changing deal but it would help to meet objectives that some industry analysts think Uber should pursue. For one thing, it would be a way for the company to take advantage of its core asset – its mobility network. The company would avoid having to own and maintain vehicles, which doesn’t fit particularly well with its otherwise “asset-light” operations. Also, the partnership and the cash infusion from Toyota together might ease the financial pressure that reportedly has led Uber to explore a sale.

The company has been spending $125M to $200M per quarter on self-driving development while losing about $1Bn per quarter, The Information reported. Whether the Toyota relationship would help Uber make a better case for an initial public offering next year, or just buy time, isn’t clear but it might put Toyota on the inside track to form a deeper partnership in the future.

Toyota has been pursuing its own AV development on several fronts. Last week, Toyota announced that four of its components companies were forming an AV joint venture to supply both Toyota brands and other carmakers. It said some Lexus models would get advanced self-driving features in 2020. It also wants to get into the mobility business to capture opportunities beyond manufacturing. But like other automakers, it lacks the kind of massive logistics network Uber has built up through its global ride-hailing operation. That, industry analysts say, is Uber’s main competitive advantage in the AV industry – not self-driving technology per se.

— Stephen Lawson is a freelance writer based in San Francisco. Follow him on Twitter @sdlawsonmedia.