Toyota Motor Corporation subsidiary Woven Planet Holdings has agreed to acquire Level Five, a self-driving unit of US-based ride-hailing firm Lyft, in a $550m deal.

The deal, said to be the first major deal for Woven Planet, will allow the Japanese firm to expand its reach beyond its base in Tokyo, Japan.

Level Five currently has offices and engineering teams in Palo Alto, California, and London, UK.

Woven Planet will pay $200m cash upfront for Level Five, with the remainder being paid over a five-year period.

Lyft CEO Logan Green said: “Today’s announcement launches Lyft into the next phase of an incredible journey to bring our mission to life.

“Lyft has spent nine years building a transportation network that is uniquely capable of scaling autonomous vehicles.

“This deal brings together the vision, talent, resources and commitment to advance clean, autonomous mobility on a global scale.”

Woven Planet will take more than 300 Level Five employees as part of the deal, increasing the company’s total number of researchers and engineers to almost 1,200.

Lyft expects the deal to remove $100m of annualised non-GAAP operating expenses on a net basis, and become profitable on an adjusted EBITDA basis in the third quarter of the year.

Woven Planet CEO James Kuffner said: “This acquisition advances our mission to develop the safest mobility in the world at scale.

“The Woven Planet team, alongside the team of researchers at Toyota Research Institute, have already established a centre of excellence for software development and technology in the Toyota Group.

“Bringing Level Five’s world-class engineers and experts into the fold―as well as additional technology resources―will allow us to have even greater speed and impact.

“This deal will be key in weaving together the people, resources, and infrastructure that will help us to transform the world we live in through mobility technologies that can bring about a happier, safer future for us all.”

Woven Planet and Lyft have also signed commercial agreements.

Under the agreements, Woven Planet will have access to Lyft’s system and fleet data to fast-track the safety and commercialisation of automated driving technology developed by Woven Planet.

In 2018, Lyft acquired UK-based technology start-up Blue Vision Labs in an effort to strengthen its plans for self-driving cars.