Toyota Motor (TM) - Get Report just joined the ride-hailing fray, fueling speculation that the Japanese auto making giant will use its new relationship with Uber to further develop autonomous vehicle technology.
But whether self-driving cars are high on Toyota's to-do list, this move emphasizes both the power that ride-hailing companies are wielding and the automaker's ability to stay up-to-date as the landscape for car manufacturers swiftly changes. It is this willingness to adapt that continues to make Toyota a good bet for investors.
On Tuesday, Toyota said that it has entered into an alliance with Uber that aims to help the company enlist more drivers.
Although Toyota's investment in the ride-hailing service remains officially undisclosed, sources have told the media that the amount is less than $100 million.
Under the new alliance, Toyota's lending arm will roll out a leasing program to offer vehicles for Uber drivers. The scheme is slated to launch in the second half in the United States and other markets.
This is part of Uber's larger scheme to build relationships with automakers to provide drivers with leased cars. Among potential ride-hailing drivers, concerns about using personal vehicles has been something of a stumbling block.
Uber, as well as its rival Lyft, hopes that by helping to facilitate car leases and allowing drivers to use the fares that they make to pay for the leases, it will be able to bring in more workers.
To this end, Uber has already established a relationship with Enterprise Rent-a-Car, as well as establishing its own leasing arm, called Xchange Leasing. The Toyota deal isn't intended to replace these services but rather to complement them.
Already, Lyft has established an alliance with car maker General Motors that allows its drivers to lease GM vehicles as well as a plan to test electric, self-driving Chevrolet Bolt taxis.
Increasingly, the lines between automakers and technology companies are blurring.
Last month, Toyota partnered with Microsoft to analyze data from its vehicles. In addition, the car maker has enlisted a former robotics executive from Alphabet to help with research on autonomous vehicles.
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The growing number of relationships among car makers and ride-hailing companies indicates one goal: to speed up the development of self-driving cars. This is one of the biggest upcoming developments in the tech sphere, and those companies at the forefront stand to profit most.
Toyota is a solid company with a history of revenue and earnings growth. The stock has declined in the past 12 months, from a high of about $140 to as low as less than $98 per share.
The stock is hovering at about $100 per share. This is a good time to get in, before new technological advancements drive the company's stock back up.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.