By Heather Somerville
(Reuters) - Toyota Motor Corp <7203.T> will invest $500 million (392.06 million pounds)in Uber to jointly work on developing self-driving cars, a source familiar with the matter said on Monday, a bid by both companies to catch up to rivals in the hotly competitive autonomous driving business.
Toyota, one of the largest carmakers and Uber Technologies Inc [UBER.UL], the leading ride-hailing service, are widely seen as lagging the competition in developing self-driving cars. The partnership deepens an existing relationship and reflects Uber CEO Dara Khosrowshahi's strategy of developing autonomous vehicles through partnerships, rather than on its own.
The deal breathes new life into Uber's self-driving business. Since a self-driving Uber SUV killed a pedestrian in Tempe, Arizona, in March, Uber has removed its self-driving cars from the road and shuttered operations in Arizona, its autonomous testing hub.
The investment values Uber at $72 billion, matching the valuation Uber received in a deal with Alphabet Inc <GOOGL.O> self-driving unit Waymo this year.
Uber will combine its autonomous driving system with Toyota's Guardian technology, which offers safety features such as lane-keeping but does not enable a vehicle to drive completely autonomously. The combined technology will be built into Toyota's Sienna minivans, to be deployed on Uber's ride-hailing network starting in 2021, the source said.
An unnamed third party will own and operate the fleet, the source said. Both companies aim to solve the enormously challenging problem of how to mass produce self-driving cars.
Toyota was not immediately available for comment. Uber declined to comment.
Toyota has been less aggressive than some rivals on moving toward full-fledged autonomous driving. It has expressed caution about the technology and focused on partial autonomous systems like Guardian.
Uber has admitted its technology lags Waymo, and the crash in Arizona was a further setback in development and testing.
Since the crash, Khosrowshahi has explored options that include more partnerships as well as a potential sale of the self-driving business, separate sources have told Reuters.
At a July conference in Aspen, Colorado, Khosrowshahi said Uber was "totally open for business ... and we are having active discussions with other partners."
Uber has a deal to purchase cars from Volvo and outfit them with Uber's technology, and with Daimler AG <DAIGn.DE>, in which the carmaker proposes to put its own self-driving cars in Uber's ride-hailing network.
Khosrowshahi's partnership strategy is a shift. Uber co-founder and former CEO Travis Kalanick had insisted on developing a proprietary self-driving system and called autonomous cars "existential" to Uber.
Previously, Uber and Toyota partnered on an electric mobility project. Two years ago Toyota invested an undisclosed sum in Uber and the two companies partnered on a car leasing program for Uber drivers. Uber has since shuttered its U.S. car leasing business.
(Reporting by Arunima Banerjee in Bengaluru and Heather Somerville in San Francisco. Editing by David Gregorio)