Lyft Inc. has decided to sell its self-driving division to Toyota Motor Corp’s Woven Planet Holdings., for $550 million to turn an adjusted profit in the Q3 of this year, according to the ride-hailing company.
Under the acquisition agreement, Woven Planet Holdings will pay $200 million to Lyft’s Level 5 division, as part of the deal and the remaining $350 million in cash over the next 5 years. Around 300 people from Lyft will be integrated to Woven Planet.
The Level 5 team will have 400 people in the U.S., London, and Munich to operate from its offices in Palo Alto, California.
The decision of Lyft follows Uber Technologies Inc.’s resolution to let go of its autonomous-driving unit in 2020. Lyft will now be able to save $100 million in operating expenses annually to bring forth profit to the company.
The shares hiked around 2% in extended trading after closing at 463.06 in New York.
Both Lyft and Toyota Corp have spent big to expand into markets other than ride-hailing for the last few years.
In a statement, Lyft’s president and co-founder John Zimmer stated that if the transaction closes within the expected timeframe and coronavirus recovery continues, the company can achieve Adjusted EBITDA profitability in the third quarter this year.