Toyota And Uber Partner Up, Are They Copying GM And Lyft?

This week, Toyota Motor Corp. (NYSE:TM) announced that it has entered a “memorandum of understanding” with ride-sharing giant Uber. The two companies are looking for a way to work together, and Toyota’s financial service entity will also be making a strategic partnership in Uber.

“Ridesharing has huge potential in terms of shaping the future of mobility. Through this collaboration with Uber, we would like to explore new ways of delivering secure, convenient and attractive mobility services to customers,” said Shigeki Tomoyama, a senior officer at Toyota.

It makes sense that a company like Uber would want to partner up with carmakers, and that’s why it’s not surprising that this agreement is not the first of its kind. It is, however, the first to include Uber.

Back in January, General Motors (NYSE:GM) announced a partnership with Lyft, one of Uber’s biggest competitors. GM also invested $500 into Lyft at the time. Just a few months later, the companies launched a trail version of its Express Drive program, a short-term car rental service intended to boost the amount of drivers using Lyft.

Volkswagen (OTC:VLKAY) also entered the market with a recent $300 million investment into the app Gett, an Israeli startup that competes with Uber in Europe and New York City.

Collecting investments and strategic deals has become the new norm for the increasingly competitive ride-sharing market. As of now, the business remains massively unprofitable. If leaked documents are accurate, Uber may have lost about $2 billion in 2015 (also read: Uber: The Good, The Bad, and The Ugly).

Of course, the real question is what will come from these types of partnerships. While Lyft’s Express Drive program is one example of a tangible outcome, all the other trends in the automotive market seem to be moving away from drivers all together.

Volkswagen did say that its engagement with Gett should add technology that will help with creating driverless technology, and Uber has made several recent moves that imply a move away from its current dependency on drivers (also read: Uber Drivers' Days Are Numbered).

For now, it’s tough to say exactly what Uber and Toyota have planned for each other. It’s safe to say, however, that both companies are wanting to stay ahead of the pack. As ride-sharers continue to partner with carmakers, Uber and Toyota will need to innovate. Whether that deals with driverless car technology, or something else entirely, remains to be seen.

For Uber, another investment adds even more to its endlessly growing valuation, leading more and more investors to wonder whether it will be the hottest IPO of 2016.