Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
The Toyota’s Woven Planet acquisition of Lyft’s Level is billed to save the latter firm $100 million of operating expense.
Woven Planet Holdings Inc, a subsidiary of Toyota Motor Corp (TYO: 7203) is set to acquire Level 5, the autonomous vehicle unit of Lyft Inc (NASDAQ: LYFT). According to the official announcement, the deal involves a multi-year commercial agreement between Lyft and Toyota’s Woven Planet to jointly pull resources towards fast-tracking the development of self-driving cars.
The move to give up its autonomous vehicle division follows a similar deal sealed by rival Uber Technologies Inc (NYSE: UBER) wherein it sold its self-driving car unit, Uber Advanced Technologies Group (ATG) to Aurora. The Uber deal announced back in August last year was valued at ATG at $4 billion and the company made investments of $400 million into the outfit.
The Lyft deal may not be as bogus, as Level 5 will be acquired for $550 million in cash, however, it signals a trend in which these advanced taxi companies are relieving themselves of the incurred or operating expenses required to manage these outfits. The aim for most firms is to trail the path of profitability as major economies around the world recover from the COVID-19 pandemic.
Per the announcement, the Level 5 team will be joining the Woven Planet team to expedite the development of AVs and other novel mobility technologies in general.
“This acquisition assembles a dream team of world-class engineers and scientists to deliver safe mobility technology for the world,” James Kuffner, CEO of Woven Planet said. “The Woven Planet team, alongside the team of researchers at Toyota Research Institute, have already established a center of excellence for software development, automated driving, and advanced safety technology within the Toyota Group. I am absolutely thrilled to welcome Level 5’s world-class engineers and experts into our company, which will greatly strengthen our efforts.”
The announcement has lifted the stock price of Lyft which closed 1% down to $63.06 on Monday. In the Pre-market, the shares are up 2.28%. The shares of Toyota are down 1.13% 8,172 Japanese Yen at the time of writing.
Toyota’s Woven Planet Deal to Help Speed up Lyft’s Profitability
The Toyota’s Woven Planet acquisition of Lyft’s Level is billed to save the latter firm $100 million of operating expense. About $200 million of the total deal value will be paid upfront while the balance is expected to be spread out over 5 years. Per the saved operating expense which stems out of a reduction in Research and Development costs can help speed up Lyft’s return to profitability.
“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. “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.”
If the regulatory approvals are not delayed and other conditions are met, the Lyft-Woven Planet deal is expected to close in Q3.