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Why Toyota's Investment In Uber Is Such a Big Deal

Toyota and Uber are teaming up, and it could have big implications for the future of ridesharing.

by David Bixenspan
May 24 2016, 10:39pm

Human drivers wanted—for now. Image: Nicholas Deleon/Motherboard

Toyota on Tuesday announced in a press release that it is going to invest in Uber as a strategic partner, something that Uber confirmed separately to Recode. This agreement comes just a few months after General Motors invested $500 million in Lyft, Uber's chief competitor.

A key component of the deal is a new car leasing program, where vehicles leased from Toyota can be paid directly out of Uber drivers' earnings. According to the release, the term of the lease "will be flexible and based on driver needs."

Shigeki Tomoyama, the senior managing officer of Toyota Motor Corporation and president of the Connected Company, a Toyota subsidiary, was quoted in the release as saying that, "Ridesharing has huge potential in terms of shaping the future of mobility. Through this collaboration with Uber, we would like to explore new ways of delivering secure, convenient and attractive mobility services to customers."

"Ride sharing is becoming a much bigger part of the car usage picture going forward"

Bloomberg reports that the size of the investment is not substantial, though neither company would comment officially on the terms. "I think, obviously, Toyota sells a lot of cars to Uber," Jan Dawson, chief analyst at Jackdaw Research, told Motherboard. "Just like a lot of the cars on the road in general are Toyota. I think that in some ways this is just formalizing that existing relationship."

While some have speculated that this deal is primarily about self-driving technology, Dawson thinks that it's secondary to the stated goal about the leasing deals and having a strategic partnership in general.

"Ride sharing is becoming a much bigger part of the car usage picture going forward, so they need to have a safety net and need to have a few relationships with companies driving that if they're going to tap into that opportunity. So in the broad sense, that's the other thing this deal is about."