GM Invests $500 Million In Lyft

January 4, 2016 0 Comments

General Motors has made a monumental investment in a company looking to dominate the ride sharing space and now has a seat on their board. General Motors has invested $500 million into the ride-sharing organization Lyft. The investment comes as part of a $1 billion round of funding for Lyft, which is now valued at $5.5 billion … that is still far from Uber’s $62.5 billion valuation. The investment by GM includes a seat for the president of GM, Daniel Ammann, on Lyft’s board.

The great question with this investment on the part of General Motors is … why? Why would one of the big three Detroit automakers invest in a company which seems to want consumers to get away from individual car ownership?

Ammann told CNBC that GM plans to work with Lyft to provide vehicles for their drivers at rates not previously possible. It seems that in the short term this means more exposure for consumers to GM vehicles and in the long term the plan is for GM to work with Lyft on a self-driving car project.

Interestingly enough, Ammann said in the same CNBC segment that the GM strategy for autonomous vehicles is to change the future for consumers. Ammann explained, “Our objective is to reshape the future of mobility. We expect our business and our industry to change more in the next five years than it has in the last 50.” Lyft’s president John Zimmer added in the same CNBC segment, “We strongly believe that autonomous vehicle go-to-market strategy is through a network, not through individual car ownership.”

What GM does in the next five years in partnership with Lyft remains to be seen, however, one thing is for certain: Lyft/GM have competition. Uber, the industry leader for ride sharing doesn’t have a major automotive partnership, but they do have their own autonomous vehicle research facility in Pittsburgh, Pennsylvania.

What can Lyft and General Motors accomplish together? Do you see Lyft competitor Uber partnering with an automaker in the future? Finally, do you see the Lyft/GM partnership as a concession by auto manufacturers that ride sharing is indeed here to stay?

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