DETROIT – General Motors Company just closed a funding of $500 million in Lyft, the ride-hailing service. The firms plan to establish a network of U.S. hubs where Lyft drivers can rent GM cars. In the longer term, the partnership aims to develop an autonomous on-demand network of self-driving vehicles, which both companies believe to be the future of transportation.
The recent funding values Lyft at $4.5 billion. GM will work with Lyft to set up a series of short-term car rental hubs across the United States, where the firms have their largest market. People who do not own cars will be able to pick up a vehicle, drive and earn money through Lyft.
Longer term, the companies will join forces to bring into reality the idea of launching autonomous cars that people can request by using Lyft’s mobile app, which allows citizens to summon a private or shared car with just a few taps.
“We strongly believe that autonomous vehicle go-to-market strategy is through a network, not through individual car ownership,” Lyft’s president John Zimmer said in an interview.
Lyft is working hard to catch up Uber, its most formidable competitor, which has raised roughly 14 times Lyft’s new valuation. Uber is currently operating its own robotics research center for self-driving vehicles in Pittsburg and is recruiting highly qualified engineering talent from Carnegie Mellon University and rivals like Google, which also has been making efforts on autonomous car research.
However, Lyft is fiercely challenging its competitors in the U.S., since it recently announced a partnership with other Asian ride-hailing companies such as Didi Kuaidi, Ola and GrabTaxi. Moreover, it teamed up with major brands like Starbucks and pop stars like Justin Bieber to expand its reach.
Given that ride-hailing services might be considered as long-term threats to auto sales, the partnership with GM could be a surprise to many experts. However, GM President Dan Ammann, who will be part of Lyft’s board of directors, said in an interview that his company wanted to make sure that it is taking part in the changing business models in mobility. He believes that the world will see more change in the field of transportation in the next five years than it has seen throughout the past 50.
Mr. Ammann pointed out that the core profit from its company’s business is originated in auto sales from outside the urban environments, where Lyft’s service is mainly available. He said that the core profit comes especially from sales of sport utility cars in suburban areas.
Lyft and GM did not reveal a timeline for when they expected their self-driving cars to become available to the public, but they have made clear that they believe there will be shared autonomous vehicles in the future. Zimmer said people will be able to enjoy watching a movie or a sport bar on wheels on their way home from work. It will take them just a few dollars to have access to these cars once they order them on Lyft.
Source: New York Times