Lyft is Selling off its Self Driving Unit to Toyota Subsidiary for $550M

Ride hailing giant Lyft announced this week that it would be selling off its Level 5 self-driving unit to Woven Planet, a Toyota subsidiary for $550 million in cash.

Both companies made the announcement and revealed that as part of the deal, Lyft and Woven Planet together would work on enhancing automated driving technology safety.

“Today’s announcement launches Lyft into the next phase of an incredible journey to bring our mission to life,” Lyft Co-Founder and CEO Logan Green said. “Lyft has spent nine years building a transportation network that is uniquely capable of scaling AVs. This partnership between Woven Planet and Lyft represents a major step forward for autonomous vehicle technology.”

“Not only will this transaction allow Lyft to focus on advancing our leading Autonomous platform and transportation network, this partnership will help pull in our profitability timeline,” Lyft Co-Founder and President John Zimmer said in a statement.

Lyft will receive, in total, approximately $550 million in cash with this transaction, with $200 million paid upfront subject to certain closing adjustments and $350 million of payments over a five-year period. The transaction is also expected to remove $100 million of annualized non-GAAP operating expenses on a net basis – primarily from reduced R&D spend – which will accelerate Lyft’s path to Adjusted EBITDA profitability.

According to Zimmer, if the deal closes on time and Covid recovery continues, he expects Lyft will become profitable on an adjusted EBITDA basis in Q3.

Lyft also expects the deal will remove $100 million of annualized non-GAAP operating expenses on a net basis, according to the news release.

The deal is the first big deal for Woven Planet. “Bringing Level 5’s world-class engineers and experts into the fold — as well as additional technology resources — will allow us to have even greater speed and impact,” said James Kuffner, CEO of Woven Planet. “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.”

It was just a few months ago that Uber, a rival of Lyft, had sold its own self-driving unit to start-up company Aurora, backed by both Amazon and Hyundai. That deal valued Uber’s unit at around $4 billion.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.