Lyft is repeating Uber’s move and is also selling its Level 5 self-driving business to lower costs and achieve profitability. To do this, Lyft has signed an agreement with Woven Planet, a subsidiary of Toyota Motor.
Lyft (LYFT) shares, up 146.5% in the past six months and 28.35% since early 2021, were down 1% on Monday after the company announced the sale of its Lyft Autonomous car division.
The press release said the buyer will be Woven Planet, a Toyota subsidiary, which will pay Lyft a total of $ 550 million in cash, of which $ 200 million will be paid upfront and $ 350 million over a five-year period.
The deal is expected to close in the third quarter of 2021, subject to the required regulatory approvals and other standard closing conditions.
Lyft noted that the deal with Woven is not exclusive and that it remains committed to existing partners, including Google Waymo, and is on track to meet its 2023 goal of allowing customers to use the Lyft app to call driverless vehicles.
Lyft’s 300-employee self-driving car division will join the Woven Planet team, which is also working on similar technologies, but will continue to work in Palo Alto. With the addition of Lyft employees, the Toyota Woven Planet group will have approximately 1,200 employees.
Lyft executives are far from the first to recognize the complexity of self-driving technology alone, and the global auto industry has a number of examples of automakers joining together to make the best progress in the industry and cut costs.
After the completion of the deal with Woven, Lyft said the company’s capital expenditures will decrease by about $ 100 million annually. The result of the deal could be Lyft’s profitability in the third quarter of this year.
“This deal will not only allow Lyft to focus on developing our leading autonomous platform and transport network, this partnership will help shorten the time frame for our profitability,” said Lyft co-founder and president John Zimmer.
Lyft’s biggest competitor, Uber (UBER), while less affected by the COVID-19 pandemic, has also sold some of its unprofitable subsidiaries as it too aims to become profitable this year. Read more in the article “Uber Sells Its Unprofitable Autonomous Driving Company to Aurora”.
Lyft operates in the US domestic market, in contrast to Uber’s international presence, and has a weak food delivery business, in contrast to the hyped Uber Eats, which helped offset the loss of the main taxi service.
Given the high rate of COVID-19 vaccination in the United States – half of the adult population received at least one dose, the resumption of air travel and the lifting of quarantine restrictions in the states, analysts expect a recovery in demand for taxi services. Earlier this month, Uber reported that March 2021 was the best month in the company’s history. This is a good signal for Lyft investors, who have seen consistent revenue growth and declining losses for the company in the fourth quarter.