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Toyota and Uber

As the competition among autonomous driving businesses is getting intense, Toyota and Uber will try to catch up by deciding to partner in developing self-driving cars. They plan to use technology from both companies into Toyota’s Sienna minivans to be deployed across Uber’s ride-hailing network from 2021. Together, they aim to design and produce safe autonomous vehicles for the mass market.

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This deal benefits both Toyota and Uber, and will still likely benefit both companies even in their individual endeavors.

Their partnership profits Uber in many ways. Firstly, CEO Khrosrowshahi’s strategy of Uber developing autonomous vehicles through partnerships has successfully began to progress. Secondly, it brings revival to Uber’s self-driving business after a self-driving Uber SUV killed a pedestrian in Arizona back in March, which moved Uber to remove its robot cars from the road, lay off hundreds of test drives and closed its autonomous testing hub in Arizona. Lastly, Toyota’s investment raised the valuation of Uber by $4 billion from the deal Uber had with Alphabet Inc.

Uber totaled $891 million losses in the second quarter where the self-driving unit is a significant contributor. However, it can compensate its losses through this partnership. With combined technology, their goal of a safe autonomous vehicle is likely to happen. And with this success, profits from their self-driving business will surely compensate the losses Uber previously occurred.

Toyota also profits from this agreement through its transformation to a mobility company as they help provide a path for safe and secure expansion of mobility services like ride-sharing that includes Toyota vehicles and technologies. Its statement that it would not combine its research efforts with Uber may somewhat have a negative impact on the partnership’s progress in producing safe automated vehicles. But, Toyota benefits from the deal when they gain more information regarding self-driving technology as they work with Uber.

Together, they make a great teamwork. Uber’s autonomous driving system and Toyota’s commitment to safety and its renowned manufacturing skills is surely to bring a safe self-driving car. Uber have experienced many problems in this path: they had further setbacks in development and testing due to the crash in Arizona, and also has met difficulties with regulators and politicians concerning safety. But Toyota’s Guardian technology, which offers automated safety features, can cover Uber’s flaws.

Toyota may be less aggressive than some rivals on moving toward full-fledged autonomous driving but their investment in research and plans to begin testing self-driving cars in the future is a great move. They won’t be able to survive the competitive autonomous self-driving business if they continue to focus on partial autonomous systems. This partnership is a great start for them in their journey to produce fully developed self-driving cars.

Toyota’s decision to not combine its research efforts is also a good move since Uber has other partnerships like their partnership with Daimler AG, and a deal with Volvo which does not have the same level of intense labor as Toyota does. This could lead to misunderstandings or conflicts of interest, so it is best that they keep some plans to themselves. Their previous partnership on a car-leasing program for Uber drivers, where Toyota invested in Uber and which Uber decided to close its U.S. leasing business, is also a factor that can affect their relationship. This could mean distrust between the companies that can badly affect their current deal.

Overall, their partnership brings great opportunities to both companies. Toyota benefits from the agreement and Uber does, too. Their goal in producing the world’s safest self-driving cars on the Uber network is surely to become reality if they work together in covering each other’s flaws and leveraging their expertise.