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GM ‘Picks Up’ Lyft By Giving $500 Million

The GM-Lyft deal is set to be one of the biggest partnership between the Silicon Valley and Motor city. General Motors of Detroit will join forces with the ride-sharing company, Lyft Inc. of San Francisco, by investing $500 million dollars to Lyft’s latest fund-raising round that has a goal of $1 million, Reuters reports.

GM–U.S.’s No. 1 automaker–does so as a preemptive measure against leading tech companies, which are already starting to reshape the global auto industry. Companies such as Apple, Alphabet, and Uber (Lyft’s biggest rival) are already at the forefront of the ride-sharing movement.

GM President, Dan Ammann, feels that not only will ride-sharing will become an integral part of the future, but self-driving cars will be at the helm as well–which is another technology that is being perfected faster than the GM President expected. He noted during an interview with Reuters. “We think our business and personal mobility will change more in the next five years than the last 50.”

Both parties have everything to gain from this partnership. GM will continue working on driverless cars on the technical side, and Lyft’s will handle the IT end of it innovative driver-matching software. Lyft will also work on more effective driver and passenger matching software, optimal route-calculating technologies. This will create a network of self operating cars that are always on demand.

Unlike GM, other top automotive companies like Toyota and Ford are actually resisting the shift to self-driving and ride-sharing initiatives. The two top car companies went so far as to invite rival companies help them resist tech companies like Apple, Alphabet, and others into self-driving cars.

Other Automakers are also investing in analyst to figure out whether companies like Lyft and Uber are truly making money that would be worth it for car companies to invest in them. If not, then perhaps that data can be used to better dissuade leading automakers to not invest.

Matthew Stover, automotive analyst with Susquehanna Financial Group, says on the issue, “The only way to understand the implications and viability of this business model (Lyft and Uber) is to become an investor.”

Despite the reservations that GM’s automotive industry colleagues hold against the new wave of self-driven and ride sharing services, GM President Ammann is still confident that this is the right move and believes that companies like Lyft are the future as he will now join Lyft’s board help with the deal.

GM’s Ammann also spoke with words of admiration regarding Lyft, “both companies [Lyft and GM] have a really common view of the future.”

Lyft’s President, John Zimmer, shared his sentiment, “culture and vision are very alike [Lyft and GM]”

Lyft has also recieved donations from powerful figures around the world towards their goal. Kingdom Holding Co., the investment firm of Saudi billionaire Prince Alwaleed bin Talal, invested $100 million, for one.

Saudi Prince Alaweed to play huge role in Lyft-GM initiatives [Photo via AP Images]
Saudi Prince Alaweed to play huge role in Lyft-GM initiatives [Photo via AP Images]
Other investors include,

  • Janus Capital Management, Japanese online retailer Rakuten Inc.
  • Chinese ride-hailing service Didi Kuaidi
  • Chinese Internet company Alibaba Group Holding Ltd.

Reports have rumored that Lyft at $5.5 billion. Lyft doesn’t disclose its financial performance, but reports also suggest that it is not profitable–which is common among most startups.

Lyft is currently in a fundraising race with rival ride-hailing app Lyft’s rival Uber is also engaged in a similar fund raising campaign. The are reportedly raising $2.1 billion which will raise worth to $64.6.

Uber has quickly taken over as the premiere ride-sharing service. It even has a feature on Facebook where rides can be called via messenger, The Inquisitr reports.

So what do you think? Is the GM-Lyft deal really going to change the automotive industry? Are ride-sharing and autonomous cars the future of automotive transportation?

[Photo via AP Images]