According to update:
There will be new ways to lease Toyotas and then earn money to cover their monthly payments by driving for Uber, and Uber will buy new Toyotas and Lexuses. But also, the two companies will be “sharing knowledge and accelerating their respective research efforts.”
This also crashes a widespread misperception, which I could trace back to a powerpoint presentation of IBM:
With recent evolving developments, which I forecasted close to a year ago, Uber is forced to secure its business, or rather mitigate its operational and regulatory risks by engaging into new, hot, and manageable area of autonomous transportation.
What does Uber and Toyota aim to accomplish
A law professor I had in University of Kaiserslautern, taught me one very useful lesson: when approaching a problem (or analysis), always go by WWW: Who Wants What.
So, let’s break down the basics:
Toyota is an automaker, with an extensive worldwide penetration both in sales of vehicles and production capabilities. It’s goal is clear: sell more cars.
Uber is a ridesharing/hire car/taxi service, with over 8 million users, over 160 thousand drivers, operating in 71 countries, 429 cities. It is heavily challenged by lack of legislation base, which forced Uber to suspend its service in a number of countries.
Obvious short-term opportunities for Toyota and Uber
A huge fleet, which needs to be maintained, updated, upgraded (both: as a personally owned vehicle by an Uber driver or as a Uber owned car) presents an enormous growth potential for Toyota long-term. Uber is benefiting from an ability to distribute Toyota’s cars under own financing umbrella (allowing owners to finance their purchase by using these cars for Uber service).
Most promising opportunity: Uber autonomous fleet by Toyota/Lexus
Autonomous vehicles (or, as Google calls it, self-driving cars) are a very hot topic in the automotive industry right now. Leading analytic companies forecast autonomous vehicles to be a standard by 2020.
A couple of related posts on this: 6 autonomous trucks driving in Europe, Autonomous vehicle software counts as driver, NVIDIA autonomous cars learning platform, Autonomous transportation of the future, Volvo rolls out 100 self driving cars on Chinese streets, Faraday FFZERO1 for rent anyone?.
With drivers no longer being a requirement, the most challenging risks of Uber are mitigated (I refer legislative risks and human factors in service quality raising legal issues). Specifically, Uber’s most challenging issue of operators not being licensed taxi drivers and cars not licensed for hire service, will be mitigated (NHTSA ruling).
The agreement will enable Uber to become truly largest hire car/taxi operator globally, and Toyota will piggy back this ride benefiting from fleet sales, vehicle maintenance, collection of data for own R&D and penetration of markets, which for one or another reason were not so promising for the company.
While both companies benefit from this collaboration, Toyota clearly gains much more. Which, I assume, will be heavily priced into the “unspecified amount of money” Uber is about to receive.
P.S. Could not resist myself to go back in time: