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 The biggest single Detroit-Silicon Valley crossover deal to date
comes as automakers work out how to respond to the rush of
technology companies such as Apple, Alphabet and Uber - Lyft's
biggest rival - to control cars of the future and likely reshape the
global auto industry.
The No. 1 U.S. automaker's investment accounts for half of Lyft's
latest $1 billion fundraising round. It is one of GM's biggest
investments in another company and the largest single cash injection
to date by a traditional automaker into a young technology firm.
The two companies said the partnership was based on the shared view
that self-driving cars will first reach consumers as part of a
ride-sharing service, rather than vehicles owned by drivers.
"We think our business and personal mobility will change more in the
next five years than the last 50," GM President Dan Ammann said in
an interview with Reuters.
The partnership will tap into GM's work on driverless cars and
Lyft's software that matches drivers and passengers and calculates
routes, to create a network of cars that would operate themselves
and be available on demand.
The two companies did not set out a timeline to get the on-demand
network up and running, but said they would immediately offer Lyft
drivers short-term rentals of GM cars.
The announcement came as Toyota Motor Corp <7203.T> and Ford Motor
Co <F.N> said they would adopt the same software to link smartphone
apps to vehicle dashboard screens.
Toyota and Ford, two of the world's biggest automakers, invited
rival car companies to join them to counter the push by Apple,
Alphabet, Tesla Motors Inc. and others into self-driving cars, or
what the industry calls autonomous vehicles.
Major automakers are trying to prevent Silicon Valley from
dominating the future of self-driving cars and ride-sharing, and are
also investing as a way to see whether Lyft and Uber are on the way
to making money, said Matthew Stover, automotive analyst with
Susquehanna Financial Group.
"The only way to understand the implications and viability of this
business model (Lyft and Uber) is to become an investor," said
Stover.
Last month, Ford Chief Executive Mark Fields said the No. 2 U.S.
automaker would explore the ride-hailing business with a fleet of
specially designed Transit vans at its Dearborn, Michigan campus.
GM CEO Mary Barra last fall said that while Apple and Google - now
called Alphabet - are pushing to dominate dashboard displays with
their software, automakers still control "the platform" of the
vehicle itself.
GM's Ammann, who will join Lyft's board as a part of the deal, said
both companies had a "really common view of the future." Lyft
President John Zimmer said the "culture and vision are very alike"
in both GM and Lyft.
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The deal heralds a wave of alliances of varying forms between
automakers and Silicon Valley companies as both try to capture new
business as transportation evolves, said Xavier Mosquet, the U.S.
auto practice leader at Boston Consulting Group in Detroit.
"In the next 10 to 20 years, (transportation) will be one of the
biggest areas for electronic and software investments," Mosquet
said. He expects ride-sharing driverless vehicles to develop first
in big cities such as Singapore, London and New York, probably
between 2022 and 2025.
Lyft said the latest $1 billion fundraising round included Kingdom
Holding Co, the investment firm of Saudi billionaire Prince Alwaleed
bin Talal, which put in $100 million.
Other investors included Janus Capital Management, Japanese online
retailer Rakuten Inc, Chinese ride-hailing service Didi Kuaidi and
Chinese Internet company Alibaba Group Holding Ltd.
Kingdom and Alwaleed are major investors in U.S. tech companies.
Together they own more than 5 percent of Twitter Inc.
Lyft said the latest funding round valued it at $5.5 billion,
cementing its status as one of Silicon Valley's much-prized
'unicorns,' or companies worth more than $1 billion without going
public. Lyft does not publicly disclose its financial performance,
but media reports have suggested it is not profitable, like many
tech startups.
Lyft is locked in a fundraising race with rival ride-hailing app
Uber Technologies Inc [UBER.UL]. Lyft said it has raised a total of
$2 billion since August 2013. Uber is reportedly in the midst of a
$2.1 billion funding round that would value it as high as $64.6
billion.
(Additional reporting by Bernie Woodall in Detroit; Editing by Bill
Rigby)
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