Automotive manufacturer Toyota agreed yesterday to invest $500m in US-based ride hailing platform Uber as part of the expansion of an existing collaboration agreement.
The deal valued Uber at about $72bn, people familiar with the matter told the Wall Street Journal, $10bn more than the reported secondary share sale that occurred earlier this year.
Uber runs an on-demand ride service spanning 80 countries that has so far been responsible for a total of more than 5 billion rides. It first formed a partnership with Toyota in a mid-2016 deal that involved an investment of undisclosed size by the carmaker.
The company has expanded into food delivery, healthcare transport and freight trucking services, and has also invested significant sums in researching self-driving cars, though it recently dropped work on the development of autonomous trucks.
Toyota made its investment in connection with a partnership intended to enhance that research and use it as the basis for an autonomous ride hailing offering that would combine custom-made Toyota vehicles owned by third-party fleet managers with Uber’s on-demand ride platform.
Dara Khosrowshahi, chief executive of Uber, said: “The deal is the first of its kind for Uber, and signals our commitment to bringing world-class technologies to the Uber network.
“Our goal is to deploy the world’s safest self-driving cars on the Uber network, and this agreement is another significant step towards making that a reality.
“Uber’s advanced technology and Toyota’s commitment to safety and its renowned manufacturing prowess make this partnership a natural fit. I look forward to seeing what our teams accomplish together.”
The investment takes the total equity and debt financing raised by Uber to almost $13.3bn since it was founded in 2010.
Uber’s last funding came in a $1.25bn investment by telecommunications firm SoftBank, TPG and Dragoneer Investment Group at a $68bn pre-money valuation in December 2017, alongside a $7.2bn secondary share purchase.
Other corporate investors in Uber include GV, the corporate venturing unit formerly known as Google Ventures, as well as internet group Baidu, ride hailing platform Didi Chuxing, media companies Axel Springer and Bennett Coleman & Co and software provider Microsoft.
Saudi Arabia’s Public Investment Fund, Fidelity, Goldman Sachs, Citic Bank, Hillhouse Capital, Sequoia Capital, Benchmark, Wellington Management, Kleiner Perkins Caufield & Byers, Menlo Ventures, Data Collective, CrunchFund, BlackRock, Lowercase Capital, First Round Capital, New Enterprise Associates and Innovation Endeavor are also backers.
The Toyota deal comes at a time when Uber is looking to expand its service to include bicycles and scooters, particularly for shorter journeys, Khosrowshahi told the Financial Times on Sunday.
The basis for such a move has already been laid. Uber paid $200m to acquire e-bike sharing service Jump in April 2018 and took part in a $335m round for bicycle and e-scooter sharing platform Lime three months later.
The expansion combined with the Toyota deal point to what investors in Uber must surely regard as the company’s endgame: a service where users can book smaller, more portable vehicles for shorter journeys while being able to access autonomous cars (Johnny Cabs, if you will) for more substantial rides.
Of course, neither scenario involves actual drivers, meaning Uber would be able to take a higher cut of the payment for any ride while avoiding the regulatory headaches surrounding the employment status of its drivers (though it would inevitably lead to other regulatory issues).
In a wider sense, the model could end up being the template for future transport, particularly in urban areas. If Uber can provide the software and ride-booking infrastructure and Toyota the vehicles, they could potentially grab a huge slice of the transport industry, and rivals have already taken note.
Ride hailing platforms Lyft and Didi Chuxing are already working on their own driverless car technology. Although the relationship has reportedly cooled, the former still counts General Motors among its backers while Didi Chuxing signed partnership deals with 12 carmakers in February. Expect to see more of these kinds of deals in future.