Toyota Motor Corp. will pay $550 million for Lyft Inc.'s self-driving technology unit, the companies announced as the Japan company expands its automation ambitions with its new Woven Planet division.

As part of the acquisition, Woven Planet and Lyft will collaborate to improve the safety of automated driving technology, according to a news release.

It will also give Toyota a direct presence in Silicon Valley and London, as well as develop the smart-city project "Woven City" at the base of Japan's Mount Fuji, effectively assisting it in riding through the drastic changes anticipated in the mobility industry and major cities.

Toyota, which currently provides Level 2 automation with advanced driver assistance technology, has several self-driving ventures in the works and has been collaborating with ride-hailing companies.

It has a stake in China's top ride-hailing company Didi Chuxing and Southeast Asia's Grab, as well as a stake in Lyft's larger competitor Uber Technology's self-driving unit, which it sold to Aurora in December.

Uber sold its own self-driving unit to Aurora, a start-up backed by Hyundai and Amazon. The unit was estimated at $4 billion in the acquisition, which included a $400 million investment by Uber into Aurora.

Lyft will now focus on what it does best with autonomous vehicles, such as routing, consumer interface, maintaining and cleaning partners' autonomous vehicle fleets, which may result in additional revenue, according to the company.

Lyft already allows customers to book rides in self-driving vehicles in select cities through partnerships with Alphabet Inc.'s Waymo and Motional, a Hyundai Motor Co and Aptiv joint venture.

The agreement allows Lyft to become profitable sooner and relieves it of the expense and risk of developing an expensive technology that has yet to reach the mainstream.

"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," Lyft Co-Founder and President John Zimmer said.