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Toyota & Softbank Likely to Invest in Uber's Autonomous Unit

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Toyota Motor Corporation (TM - Free Report) and Softbank Group along with others are in talks to invest in the autonomous vehicle division of the ride-hailing provider, Uber Technologies, Inc., per Reuters. The deal led by these two companies based in Japan is expected to invest $1 billion in the Uber division, which will value the unit around $5-$10 million. The deal is anticipated to close in April 2019.

The funding will aid Uber's unit to develop autonomous technology that is already losing money. Further, the investment will help this ride-hailing provider to improve its valuation as it prepares for market debut.

In 2018, Toyota invested $500 million in Uber’s autonomous division for the development of self-driving cars. Apart from the investment, Toyota is providing automated safety features for Uber’s autonomous driving system. The combined technology will be used in Toyota’s Sienna minivans that will be deployed on Uber’s ride-hailing network, beginning in 2021.

Toyota Motor Corporation Price and Consensus

 

Unlike others in the auto industry, Toyota has been less aggressive toward the development of autonomous vehicle technology. Further, accident concerns cautioned the company to build fully-autonomous cars and rather focus on partial autonomous technology like Guardian. Nevertheless, Toyota has been investing in research and development. It will likely start testing its self-driving vehicles by 2020.

Over the past six months, shares of Toyota have outperformed the industry it belongs to. Shares of the company lost 3.9% compared with its industry’s decline of 15.8% during that period.

 


Zacks Rank & Stocks to Consider

Toyota currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader auto sector are Ferrari N.V. (RACE - Free Report) , Geely Automobile Holdings Ltd. (GELYY - Free Report) and PACCAR Inc. (PCAR - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ferrari has an expected long-term growth rate of 18.5%. Over the past three months, shares of the company have gained 31.3%.

Geely Automobile has an expected long-term growth rate of 7%. Shares of the company have gained 0.3% on a year-to-date basis.

PACCAR has an expected long-term growth rate of 10.8%. Shares of the company have gained 22% over the past three months.

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