General Motors Co will invest $500 million in Lyft Inc. to develop a long-term strategic alliance to build out a connected, ownerless car service.
The deal unveiled Monday marks the first time a large car maker has joined with a ride-sharing company, and has catapulted Lyft’s valuation to $5.5 billion.
Lyft unveils $1 billion Series F Fund
On Monday, Lyft unveiled the close of its $1 billion Series F round, with General Motors contributing $500 million, while the other $500 million came from Saudi Prince Al-Waleed’s Kingdom Holding Company, Janus Capital Management, and previous investors Didi, Rakuten, and Alibaba.
The latest deal is of particular interest considering Lyft CEO Logan Greene has said in the past that most people wouldn’t buy self-driving cars.
Interestingly, ride-sharing companies services threaten auto sales as more urban commuters hail rides from Lyft and Uber Technologies Inc. instead of owning a car. The auto maker said it would work with Lyft to develop a self-driving-car system that could eventually let customers order a car on their smartphones and have the vehicle appear at their doors with no driver required.
In the coming months, GM and Lyft plan to build a series of rental-car centers where Lyft drivers can rent vehicles at discounted rates.
Exuding confidence over the deal, GM President Dan Ammann said in an interview: “We believe that the first large-scale deployment of autonomous vehicles will be in this kind of on-demand, ride-share platform”. He indicated teams from Lyft and GM would begin working together soon, but declined to provide more specifics on what they would develop or how soon it could become available.
Lyft’s valuation doubled since May 2015
As outlined by ValueWalk, Lyft announced last May that Carl Icahn had taken a $100 million stake in the ride-sharing company. Carl Icahn’s investment is officially an extension of a round of funding the start-up undertook back in March valuing the three-year old firm at close to $2.5 billion.
GM’s latest investment gives the ride-sharing start-up a valuation of $5.5 billion and a major ally in the global battle against Uber Technologies Inc.
The latest deal envisages GM President Ammann to join Lyft’s board. Ammann anticipates the automotive industry to “change more in the next five years than it has in the last 50 and we obviously want to make sure we’re at the forefront of that change”.
Providing the rationale behind the deal, Ammann said rather than stay neutral in the battle between Uber and Lyft, GM invested because of the “level of integration and cooperation that will be required, particularly for the longer term nature of this”.
In an effort experimenting with its own ride-sharing initiatives, Ford Motor Co last year started offering a network of shared cars in London to tap the growing market for on-demand driving. Fontinalis Partners LLC, a venture firm funded by Ford family heir Bill Ford, has previously invested in Lyft.
Self-driving cars are at the intersection of the high-tech and automotive sectors, and tens of billions are being pumped into perhaps the hottest and most coveted sector today. Uber is working to develop its own autonomous driving capabilities, and a slew of automakers have already deployed semi-autonomous technologies and continue to experiment with “shared mobility.” Google / Alphabet have also wisely decided to take baby steps in implementing their autonomous car concept.
The post GM Betting $500 Million On Lyft To Boost Autonomous Vehicles appeared first on ValueWalk.
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