The size of the investment values Uber’s AV business at nearly $7.3 billion. It is expected, according to multiple media reports, that Uber will spin off the self-driving business unit as a separate company under its corporate umbrella so as to not mingle it with the results of the bread-and-butter ride- hailing business
The new investment gives Uber a jolt of cash to fund further development of the AV unit, while giving off operational intelligence to Toyota, Denso and Softbank, all of whom view the evolving future of AV driving as providing new revenue streams when it is fully developed.
Uber spent $457 million on R&D for self-driving technologies and flying cars last year, and said in its S-1 filing that it expects to increase those investments in the near term. A fresh $1 billion will help offset those staggering costs. Too, Denso and Toyota are expected to license Uber technology at a favorable cost, which should help drive down costs.
Denso is a first-time investor in Uber, while SoftBank and Toyota have invested in the past. The company builds and sells a variety of vehicle parts, such as electronics, engine cooling systems, drivetrains, and braking systems.
Look for Uber to use some of the cash to acquire human capital. It has not been easy for the ride-hailing company to attract the best and brightest away from OEMs and tier-one suppliers. It is also possible that all three investors will lend people to Uber’s development efforts.