General Motors is investing $500 million in Lyft, part of a wider-ranging strategic partnership that will include a rental program for drivers of the car-sharing service and the creation of an on-demand autonomous car network.
Along with a seat on the board of the San Francisco car-sharing network, GM is closely allying itself to the shift away from its main business until now — the sale of cars — to a more service-oriented one.
“The car industry is going to change more in the next five years than in the past 50,” said GM president Dan Ammann, noting it was eventually moving away from ownership and toward a more software and service business. “Even for GM, $500 million is a lot of money, but investing in different business models are going to be an important part of our future.”
The investment is part of a larger funding round of $1 billion for Lyft, including a previously reported $100 million from Saudi Arabia’s Kingdom Holding Company. Other existing Lyft investors will also participate, including Janus Capital Management, Rakuten, Didi Kuaidi and Alibaba.
Post-money, Lyft will now be valued at $5.5 billion, which is still a fraction of the $60 billion-plus valuation of its rival Uber. So far, the startup has raised $2 billion since its founding in 2013.
But now Lyft has something Uber does not have yet — the significant backing of a major U.S. automaker. In May, Lyft did garner an investment from Bill Ford, executive chairman of the U.S. automaker, but it came from a personal venture fund.
The partnership also marks Lyft’s boldest declaration yet that it intends to operate with self-driving cars in the future. Uber is already plowing significant resources into its own autonomous driving research, but it looks like Lyft will outsource this technology to GM. Google, the leader in autonomous driving tech, has also held talks with multiple carmakers about partnerships, including, reportedly, a big one with Ford.
Click here to read more.
SOURCE: Re/code, Kara Swisher and Mark Bergen