Benzinga | Apr 27, 2021 06:11AM EDT

Lyft To Sell Self-driving Car Unit To Toyota Arm For $550 Million

Lyft Inc (NASDAQ:LYFT) is selling its self-driving unit Level 5 to a Toyota Motor Corp (NYSE:TM) subsidiary Woven Planet Holdings for $550 million in cash, the companies announced on Monday -- a move that is expected to help the ride-sharing company hit its profitability target a quarter earlier.

What Happened: Woven Planet Holdings will pay $200 million upfront and the remaining $350 million will be paid over a five-year period. The deal will help Lyft shed $100 million of net operating costs and deliver profit faster than anticipated.

The San Francisco-based company said it now expects to become profitable on an adjusted basis before interest, taxes, depreciation and amortization in the third quarter of this year, three months ahead of its previous estimate.

The Level 5 team will join the Toyota subsidiary dedicated to developing autonomous driving and other advanced mobility technologies. It will also use the Lyft system and fleet data to speed up the safety and commercialization of the automated-driving vehicles that Woven Planet will develop.

See Also: Lyft Rider Numbers Remain Depressed, Revenue Falls In Q4

Why It Matters: The COVID-19 pandemic took a toll on the ride-hailing company in 2020 -- forcing it to lower costs and restructure the business. The sale will further allow it to focus on its core operations.

The Japanese automaker Toyota had earlier this year revealed plans to develop and build autonomous minivans for ride-hailing networks with Aurora Innovation Inc, a Silicon Valley-based autonomous-driving startup with at least a $10 billion valuation and longtime supplier partner Denso Corp (OTC:DNZOY).

Aurora in December last year announced the acquisition of Lyft rival Uber Technologies Inc. (NYSE:UBER).

Price Action: Lyft's shares closed 1% lower at $63.06 on Monday but were up 2.5% in after-hours trading.