January 4, 2016 — General Motors is jumping into the ride sharing world investing $500 million in three-year old start up Lyft, reports Bloomberg Business. Meanwhile, GM’s president Dan Ammann will be on the company’s board. The investment is part of a $1 billion fund raising effort from Lyft which raises the company’s valuation to $5.5 billion.
As part of the new relationship, GM will become a preferred vehicle provider to Lyft drivers while Lyft will provide the automaker access to its technology which includes matching customers with drivers and automated payments. Both companies will work together to create a system of autonomous vehicles that customers can hail from the Lyft phone app.
Lyft drivers who do not have their own vehicle will be able to rent vehicles from GM either daily, weekly or monthly from rental hubs the automaker will set up over the next several months.
It’s an intriguing partnership that will put Lyft in a stronger position as it competes with Uber, a company that recently was valued at more than $62 billion. It also positions GM to be at the forefront of what many say will be an upheaval of how society views transportation.
The investment comes at a time when vehicle sales are at all time highs and are projected to stay strong through the end of the decade. But ride sharing is the fad of the moment — because of the growing popularity of companies like Uber and Lyft.
Ford Motor Co. launched a ride sharing experiment last February in six U.S. cities and in London that was slated to last through November of 2015. Ford President and CEO Mark Fields is scheduled to speak at a press conference this week at the Consumer Electronics Show in Las Vegas. Media reports have speculated Ford may announce a partnership — or even a joint venture — with Google’s autonomous vehicle division. At the very least, Fields will provide more color into Ford’s continuing efforts in this “new era of mobility.”
GM CEO Mary Barra will present Wednesday’s keynote at CES where it’s likely she’ll address GM’s perspective of how transportation is expected to change in the near future and how her company’s partnerships with Lyft will help lead that change.
What’s not being talked about much — at least publicly — is how this new world will affect the retail industry. Meanwhile, as automakers continue to prepare for a world where vehicle ownership declines significantly, they continue to force their dealers to spend money on facilities that are built for a world in which car ownership is still the rule, not the exception.
Ammann tells CNBC today GM doesn’t view the move toward ride sharing as a threat because much of their focus will be in heavy urban centers.