Lyft, a ride-hailing company has sold off its autonomous vehicle unit to Toyota’s Woven Planet Holdings for $550 million. The transaction which is expected to be completed within the third quarter of 2021 will lift off the burden of costly annual expense from the ride-hailing company’s budget as it also ends its almost 4-year effort in trying to develop its own self-driving system.
Lyft, in a statement on Tuesday, revealed that with the acquisition, it will be able to take out $100 million of annualized non-GAAP operating expenses on a net basis as those savings will be critical for the company in its pursuit for profitability. Although, the transaction will see Lyft receive $550 million in cash, with $200 million to be paid upfront; while the remaining $350 million will be made in payments over five years.
John Zimmer, co-founder and president of Lyft, in a special note during the announcement said, “Assuming the transaction closes within the expected timeframe and the COVID recovery continues, we are confident that we can achieve Adjusted EBITDA profitability in the third quarter of this year.”
The company further revealed that the so-called level 5 division will be folded into Woven Planet Holdings and also, about 300 workers from the unit will be integrated into the new acquirer. The Level 5 team, which in early 2020 numbered more than 400 people in the U.S., Munich and London, will continue to operate out of their office in Palo Alto, California.
Meanwhile, Lyft will dedicate its resources to what the company says it was really aiming for all along: to become the go-to ride-hailing network and fleet management platform used by any and all commercial robotaxi services. In the meantime, the ride-hailing company has already partnered AV developers, a $4 billion Hyundai-Aptiv joint venture known as Motional, as well as Waymo. And as part of the acquisition agreement, Woven Planet signed commercial agreements to use the Lyft platform and fleet data.
Lyft said that the agreement with Woven Planet is not exclusive, and it will continue its partnership with Motional and others.