Lyft Inc (LYFT.O) will sell its self-driving technology unit to Toyota Motor Corp (7203.T) in a $550 million deal, the companies said on Monday, allowing the ride-hail company to hit its profitability target one quarter earlier.
The sale of Level 5 to Toyota’s Woven Planet division will allow Lyft to focus on partnerships with self-driving companies that want to deploy their technology on its platform, rather than develop costly technology that has yet to enter the mainstream.
Lyft will receive $200 million cash upfront, with the remaining $350 million paid over five years, the companies said. The deal is expected to close in the third quarter.
Lyft did not immediately say how it plans to invest the funds. But the sale will allow Lyft to report third-quarter profit on an adjusted basis of earnings before interest, taxes, depreciation and amortization as long as the company continues to recover from the coronavirus pandemic, it noted.
The sale will also remove $100 million in annual net operating costs, Lyft said.
Woven Planet, which Toyota set up in January to develop connected vehicle, autonomous and semi-autonomous driving technology, will take over all of the more than 300 employees of Level 5.
The deal marks Toyota’s latest foray into ride-hailing at a time of growing consolidation in the capital-intensive self-driving industry. The Japanese automaker already owns a stake in China’s top ride-hailing firm Didi Chuxing and Southeast Asia’s Grab.