Car makers and ride sharing companies to build autonomous vehicles
Fiat Chrysler is the 3rd largest automobile company in the United States of America. The company plans to partner with the leading ride sharing giant in the country because of the focus of all the automakers towards the transportation company. The automotive experts said that the main reason behind this partnership is that the car makers have realized that the people in the present situation are not interested in buying new cars. So they consider the partnership as a long term view. The ride sharing company has already partnered with the Japanese car maker Toyota Motors Corp, in which the company owns a small share.
Following this partnership, the General Motors invested five hundred million dollars in Lyft and Volkswagen invested three hundred million dollars in Gett. The technology giant Apple invested one billion dollars in the Chinese ride sharing company Didi Chuxing because of their market growth in China. The online car hailing companies are in talks with the automaker regarding the development of the autonomous cars. The ride sharing giant is working to build an autonomous car with Carnegie Mellon robotics and has spent $5.5m to develop apps like uber advanced technology center in Pittsburgh. Following the transportation giant many other automobile companies like BMW, Volkswagen, Fiat Chrysler and Daimler are interested in building the self driving automobiles.
The partnership between the Uber and Toyota said that they are not developing the driverless cars. The automobile company Fiat Chrysler is in talks with other companies in the Silicon Valley regarding the development of the driverless cars, and Google Alphabet agreed the partnership of developing hundred driverless minivans. The advancement in the technology allows the manufacturers to build autonomous vehicles with more technologies inbuilt.
Ride sharing company turned towards the leveraged loan market
The ride sharing company is moving to the leveraged loan market and is giving the debt instead of their shares, this shows that the app based company can increase more revenue without diluting the holdings provided the investors. The company is now turning into a new source for money in exchange for something apart from the equity. The ride sharing company which is spending more in India and China to beat their local competitors Ola and Did Chuxing is not short of money but is short of the equity. And the company’s CEO said that they have lost one billion dollars in China, which is because of the dispatch system software debt investors and not the company. So a company that has to pay the loans has to make more rather than losing it.
The company, which plans to become a global giant requires more cash inflow, but selling the equity is a bit costly for the ride sharing company, so they are planning to turn to the leveraged loan market. Sources said that the uber taxi application company hired Barclays and Morgan Stanley to sell the leverage loan of one billion dollar to two billion dollars to the institutional investors. The experts said that the leveraged loan is similar to the junk bonds, which are of high risk but they yield higher returns, so if the company is planning to sell a debt they have to pay back for that debt. To increase the company’s revenue they are trying to hire more drivers to work for them, so they launched an auto financing scheme. Sources close to the ride sharing company said that they will raise fifteen million dollars from the equity and debt.