Toyota Invests US$500 Million in Uber Self-Driving, Highlights Mobility through Collaboration Approach

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4Q 2018 | IN-5249

This month, Toyota announced that they would be investing US$500 million in Uber for a self-driving collaboration. The purpose of the partnership will be to use self-driving technology, expertise, and resources from both companies to help develop a competitive autonomous mobility service. The collaboration will see Toyota licensing Uber’s proprietary autonomous driving technology, combining it with their own technology (e.g., the Toyota Guardian), and then finally integrating it into Toyota’s Sienna Minivans. There are clear research and development synergies gained from this association that highlights Toyota’s approach of collective collaboration as they transform to a mobility company.

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Toyota Invests US$500 Million in Uber in Self-Driving Partnership

NEWS


This month, Toyota announced that they would be investing US$500 million in Uber for a self-driving collaboration. The purpose of the partnership will be to use self-driving technology, expertise, and resources from both companies to help develop a competitive autonomous mobility service. The collaboration will see Toyota licensing Uber’s proprietary autonomous driving technology, combining it with their own technology (e.g., the Toyota Guardian), and then finally integrating it into Toyota’s Sienna Minivans. There are clear research and development synergies gained from this association that highlights Toyota’s approach of collective collaboration as they transform to a mobility company.

Besides some investment from Original Equipment Manufacturers (OEMs) in ride-sharing providers, both OEMs and ride-sharing providers have mostly continued to work independently, thinking of each other as competitors rather than collaborators. However, this latest partnership announcement represents a true collaboration between an OEM and a ride-sharing partner. But why did Uber choose to partner on driverless technology? Uber already has its own driverless technology, as well as a strong global mobility brand, but still chose to partner with Toyota. And what do both OEMs and ride-sharing providers stand to gain from collaborating on driverless technology development?

A New Level of Collaboration?

IMPACT


Currently, OEMs, ride-sharing companies, technology companies, and others often collaborate to share information; at this stage, though, it is still rare for two companies to collaborate in codeveloping autonomous technology. In November 2017, Uber recently announced that they would be partnering with Volvo to help integrate their autonomous technology into Volvo XC90 Sport Utility Vehicles (SUVs). The framework agreement also saw engineers from both companies codeveloping the XC90 base to incorporate all necessary safety, redundancy, and core autonomous technologies required for Uber to add its own self-driving technology. Seven months later, however, the same Volvo XC90 was involved in a fatal accident in Arizona; details later emerged that Uber had disabled Volvo’s Automatic Emergency Braking (AEB) system. Although there was collaboration on some front, clearly the partnership was not that of codevelopment, and Uber was still in complete control of the development and deployment of the driverless service.

This new partnership between Uber and Toyota differs in that there will be codevelopment of autonomous technology, with clear plans to fuse Uber’s automated driving system with some of Toyota’s Guardian Technology. Interestingly, the Toyota Guardian uses the same hardware, software, and advanced Artificial Intelligence (AI) technology as Toyota’s own autonomous driving system, the Toyota Chauffeur. The Toyota Guardian system provides a safety strategy in which a human driver still controls the vehicle but in which the system actively monitors the environment and the driver to prevent accidents or loss-of-control situations. Toyota eventually plans to incorporate its own autonomous system that uses both the Chauffeur and the Guardian platforms. It would seem this technology collaboration will see Toyota substituting their own Chauffeur technology with Uber’s automated driving system. It will be interesting to see how well the two systems can integrate, as Toyota’s own autonomous driving system and the Guardian platform use the same sensor suite and complementary software. However, this new system will need to fuse together two separate sensor suites and software.

Partnership Highlights Alternative Route Toward Mass-Deployment of Driverless Vehicles

RECOMMENDATIONS


At the 2018 International Consumer Electronics (CES) Show, Toyota announced the its e-Palette mobility alliance, which is their vision for the future. The e-Palette alliance is Toyota’s ecosystem for mobility-powered businesses. At the heart of the mobility platform are multifunctioning vehicles—the “e-Palette Concept”—that can be outfitted with purpose-built interior in accordance with the vehicle use case, whether that is parcel delivery, ride-sharing, or even on-road e-commerce. Crucially, e-Palette’s alliance partners will be able to leverage the e-Palette concept vehicle in coordination with Toyota’s Mobility Services Platform (MSPF)—a suite of tools incorporating vehicle leasing, insurance, fleet management, big data, and autonomy tools—or to incorporate the vehicle into their own technology development platform. This platform reflected Toyota’s flexibility and commitment to forming partnerships with third-party companies with an open control interface and software development tools, enabling partners to incorporate their own technology if they desire.

Since the announcement, Toyota has made numerous investments in ride-sharing providers. Just two months ago, the company poured US$1 billion into Asian-based ride-sharing provider Grab. In fact, they are not the only OEM to invest in ride-sharing providers—Daimler and Volkswagen (VW) made similar investments over the past few months by investing in Taxify and Gett. Although on some level these investments represent a high-level partnership, they were the not true collaborations that Toyota described at CES 2018.

The announced Uber/Toyota partnership is a new level of collaboration for Toyota. The announcement clearly states intentions not only to fuse technology but also to use both the MSPF platform as well as Uber’s ride-sharing distribution channel. This partnership plays to both company’s strengths: Uber’s position in driverless technology development and their market leading service distribution channel, and Toyota’s committed focus to safety and manufacturing prowess. This partnership is only possible because of Toyota’s open approach to partnerships, allowing companies to openly collaborate on technology and service development. This is in stark contrast to most OEMs that tend to operate on a closed-wall basis by focusing on developing in-house technology with their tier-one suppliers. Perhaps Toyota’s partnership highlights a new approach to developing mobility services for OEMs. Such OEMs as VW and Daimler could use a similar approach on which to build those investments they currently have in ride-sharing services and in developing driverless technology and mobility services.

Uber, on the other hand, gained a vital partner at a pivotal time to help it push toward driverless mobility services. Uber’s initiative into self-driving vehicles seemingly took a huge step backward in 2018, when one of its vehicles was involved in the aforementioned fatal crash involving a pedestrian in Arizona. As a result of the crash, Uber was forced to pause autonomous trials for several months and since has chosen to resume trials with a human driver operating the vehicle for data collection only. This setback has put the company behind market leaders Waymo and GM Cruise, both of which are set to launch driverless services in 2019. The latest partnership is therefore a big vote of confidence in Uber’s post–Arizona crash technology and helps incorporates Toyota’s commitment toward safety into Uber’s own goals. The Toyota Guardian technology may also be used to monitor human drivers’ behavior as they test autonomous vehicles on the road to provide extra safety during trials.

Interestingly, an unnamed third party will own and manage the fleet of vehicles, which further highlights that this new partnership will not be like the previous Uber/Volvo partnership, as Uber will control all the terms of development and deployment. The partnership will allow both companies to control the development of the technology, and deployment will utilize Toyota’s MSPR mobility platform and Uber’s distribution channel. This model could serve as blueprint to both OEMs and ride-sharing providers alike. OEMs could use this approach to build on their current investments in ride-sharing services to build the correct distribution channels for mobility services as well as to help codevelop technology. Meanwhile, ride-sharing services that have yet to develop to driverless services or that are at the early stages could use this approach to help codevelop driverless technology and gain a vital development partner.

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