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Uber teams up with Toyota to build its self-driving car fleet

Uber is teaming up with Toyota to build self-driving cars using technology developed by both companies for its ride-hailing service.

As part of the deal the Japanese auto-maker will also invest $500m (£387m) in Uber, putting it into competition with others in the sector that are also developing driverless taxi services. 

“Today, we’re taking our relationship with Toyota Motor Corporation to new heights - and while this isn’t our first automotive partnership, we’re taking a new approach,” said Eric Meyhofer, head of Uber Advanced Technologies Group.

“As part of this partnership, we’ll supply our proprietary self-driving system to Toyota Sienna Minivans. Rather than owning and operating the fleet of self-driving vehicles, these minivans will be owned and operated by an agreed upon third party, a new business model for Uber.”

The deal aims to combine the best features from the two companies’ work on autonomous technology into cars that will be picking up Uber’s customers by 2021.

Toyota will also implement its ‘Mobility Services Platform’ in the vehicles, the company’s core information infrastructure for connected vehicles that could allow them to connect to future 5G networks.

By the time that happens, Uber hopes to have completed an initial public offering of stock that will enrich a list of early investors, now including Toyota. These investors have been pouring billions of dollars into Uber’s ride-hailing service, which has yet to prove that it can make money since its inception nearly a decade ago.

Uber is counting on self-driving cars to help it turn the financial corner by reducing the need to pay human drivers. The current Uber service is based on a human driver picking up passengers in their private vehicle, the ride having been arranged by the customer through Uber’s smartphone app.

By expanding into autonomous vehicles, Uber also hopes to ward off a looming competitive threat from another early investor: Google and its self-driving car spin-off Waymo. This is poised to launch its own ride-hailing service in Arizona before the end of this year. 

“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,” said Uber chief executive Dara Khosrowshahi.

Meanwhile, Toyota is trying to evolve from being a pure car maker into a “mobility company”, as are many of its industry peers, including General Motors and Ford in the US.

That crusade has prodded decades-old car makers such as Toyota and GM to invest in and partner with technology companies working on self-driving cars while also opening up their own research hubs in Silicon Valley.

Besides allowing them to lean on each other’s respective strengths, Toyota’s deal with San Francisco-based Uber will also help the two companies spread out the cost of designing and building the complex systems, which use computers, cameras, radar and laser sensors to guide the self-driving vehicles.

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