Lyft, Inc. announced today that it will sell it’s self-driving technology division to Toyota. The deal is estimated at $550 million and will allow Lyft to achieve its target for profitability one quarter earlier than expected. The all-cash buyout will be paid out over 5 years, but $200 million will be paid upfront.
Lyft, like many tech startups, is eager to achieve stable profitability and generate returns for investors. Despite a significant amount of media attention, the company has never achieved net annual profitability. This fact, combined with the challenge of being a ridesharing business in a pandemic, makes an immediate cash infusion look very appealing. Lyft sees this deal as an opportunity to shed a cash-demanding side project and focus on its core business.
The move is also yet another foray ride-sharing by Toyota. The car manufacturer owns stakes in top Asian ride-sharing firms and in January set up its own platform called Woven Planet to focus on developing its own autonomous driving technology. Toyota also owned a stake in Uber, but sold this to Aurora at the end of last year. Not content to simply be an investor, Toyota now seems determined to get involved directly in the autonomous driving market.