General Motors announced today that it is investing $500 million in ride-sharing service Lyft, with plans to create a network of on-demand autonomous vehicles in the United States.
“We see the future of personal mobility as connected, seamless and autonomous,” GM President Dan Ammann said in a statement. “With GM and Lyft working together, we believe we can successfully implement this vision more rapidly.”
The partnership will pair GM’s decades-long R&D devoted to autonomous vehicle technology with Lyft’s software for ride matching, navigation and payment. The companies also plan to team up to develop a national network of rental hubs for Lyft drivers to rent GM vehicles that they can then use to ferry passengers.
John Zimmer, president and co-founder of Lyft, told CNBC today that the rental cars would allow potential recruits whose own cars do not meet Lyft's qualifications to work as Lyft drivers.
"We actually have thousands and thousands of signups for individuals whose cars don't qualify," he said. "Whether it's a year requirement or the size of the vehicle. We can now market to those individuals who have already applied but didn't have the right car. As well as let people know that this is a really great income-earning opportunity, whether or not you have a car."
Zimmer said that drivers would be able to rent by the day, week or month, and use the cars for their personal needs as well.
The GM investment is part of a total of $1 billion in the latest round of investments in Lyft, including $100 million from a group of Saudi Arabian investors. With the latest investments, Lyft is now valued at $5.5 billion.
As part of the new partnership, GM will hold a seat on Lyft’s board of directors.
John Zimmer, president and co-founder of Lyft, said in a statement: “Working with GM, Lyft will continue to unlock new transportation experiences that bring positive change to our daily lives. Together we will build a better future by redefining traditional car ownership.”
Founded in June 2012, Lyft has 700 employees and 315,000 active contract drivers in 190 cities. Taking the driver out of the equation would go a long way toward reducing Lyft’s payroll.
Some automotive analysts have speculated that insurance and technology costs could inhibit the average consumer from owning a driverless car, and that instead the cars would be owned by large companies in fleets that riders could then rent on demand.
GM plans to have an autonomous fleet of its electric-powered Volts ferrying riders on its campus in Warren, Mich., later this year.