Woven Planet, a mobility and technology company wholly owned by Toyota, on Tuesday entered an agreement to purchase Level 5, the self-driving car division of ride-hailing company Lyft.

The deal, which is expected to close by the third quarter of 2021, is valued at $550 million and will see Lyft receive $200 million up front and the remainder paid out over five years.

It's the first major deal for Woven Planet which was only established in January. The goal of the company is to bring safe and reliable driverless transport to the masses.

One of its projects is the construction of a whole town, known as Woven City, at the base of Japan's iconic Mt. Fuji. The town will be used for development of self-driving cars, robotics, smart-home systems, and other future tech in a real-world environment.

Toyota's Woven City

Toyota's Woven City

In addition to developing its own self-driving technology, Toyota has been making strategic investments in a number of self-driving technology companies to help accelerate the development of driverless transport. The list includes U.S.-based Nuro and Uber Advanced Technology Group (Uber ATG), as well as China's Pony.ai.

Lyft rival Uber sold its Uber ATG division only last December to self-driving technology company Aurora, which is also a partner of Toyota.

By exiting the capital-intensive business of developing self-driving cars, both Lyft and Uber will be able to reach sustained profitability much earlier. As self-driving technology matures, they will then be able to license the technology for their ride-hailing fleets. Lyft already has a platform that allows third-party self-driving cars to operate within its ride-hailing network.

“Not only will this transaction allow Lyft to focus on advancing our leading autonomous platform and transportation network, this partnership will help pull in our profitability timeline,” John Zimmer, Lyft's president and co-founder, said in a statement.