The last we heard of Uber’s quest for world domination, it had teamed up with the behemoth that is Facebook. It's a formidable pairing, but now one of the taxi app’s rivals has responded with a landmark tie-up of its own.
Lyft has just announced a successful $1bn (£680m) funding round, led by a $500m investment by General Motors. GM is doing more than opening its wallet – the companies will now work together to build ‘a network of on-demand autonomous vehicles’ (that's 'self-driving cars' to me and you), which will be able to operate on the Lyft platform. GM will also be providing existing Lyft drivers with easier access to rented cars.
Lyft called GM ‘an important strategic investor’ as it emphasised its ambitious goal to ‘redefine traditional car ownership’. The terms also mean GM has become the preferred provider of vehicles for Lyft drivers in the US and GM president Dan Ammann will take a seat on the San Francisco-based firm’s board.
‘We see the future of personal mobility as connected, seamless and autonomous,’ he said. ‘With GM and Lyft working together, we believe we can successfully implement this vision more rapidly.’
The initiatives' finer details haven’t yet been released and there’s still a cloak of mystery surrounding the pricing of the rental option and how it will be launched. A Lyft spokeswoman said it’s yet to be determined whether Lyft or GM will own the self-driving cars.
Fundamentally, GM and Lyft have teamed up because they both need each other’s expertise and are operating on the same belief that autonomous cars will first reach consumers through a ride-sharing service, as opposed to through car ownership.
GM has been quietly working on driverless car technology for years, but still forms part of the chasing pack behind the likes of Tesla and Ford. But it has also acknowledged that the market for personal transportation has changed considerably in recent years and its partnership with Lyft affirms that belief.
Amman told Quartz, ‘There’s a big chunk of the customer base that’s saying I want to get from A to B in a different way; I want to use a car, but I don’t want the hassle of owning one.’
From Lyft’s perspective as a firm that hasn’t yet dabbled much in the way of self-driving cars, the tie-up with GM will allow it to stay in closer touching distance with Uber. Its bigger rival has already set up its own research centre focusing on driverless car technology, as it seeks to replace humans with robotics in its service.
Lyft said other investors in the funding round included Kingdom Holding Company, Janus Capital Management, Rakuten, Didi Kuaidi and Alibaba. It closed the round at a $5.5bn post-money valuation, but still has a way to go to step out of Uber’s shadow. Last month, Uber was reportedly after another $2.1bn in funding to boost its valuation to a cool $62.5bn (above the market cap of GM). With that in mind, Lyft’s range of partnerships look sensible, but aren’t going to be giving Uber too much cause for concern - yet.