GM Makes $500 Million Investment On Lyft

Lyft said Monday that GM invested $500 million in the company as part of a round of a $1 billion round of fund-raising. “Together we will build a better future by redefining traditional vehicle ownership”.

For now, the deal means GM cars will be the “preferred” vehicle used by Lyft drivers who rent their cars in various US cities. These functions, GM believes, will “create a richer ride-sharing experience for both driver and passenger”.

Phil Harrold, automotive partner at PwC, said: “Across the patch we are seeing a realisation that the market is changing”.

GM has been working on creating driverless cars since long and this investment shows how close they are at realising that goal. “The GM deal should help Lyft extend its life as a smaller but still potent number two in the ride-hailing space”.

The final context is that Lyft and GM are going against Uber.

While it might be quite a few years until cars that can travel without a human driver are allowed on public roads, GM and Lyft will be able to co-operate in other ways in the meantime. Short-term-use cars will be available at rental hubs that GM plans on opening in various cities through the U.S.

Lyft was valued at $4.5 billion following GM’s funding, 14 times less than Uber’s $62.5 billion value, according to the NY Times.

The speed of change will be very fast as tech companies such as Google, NVIDIA, Tesla and tier one auto suppliers race to develop autonomous technology.

Lyft’s competitors include Sidecar and Uber, whose various ride-hailing services have disrupted traditional taxi and other transportation businesses in numerous countries around the world since it was founded in 2009.

Lyft’s shiny new $5.5 billion valuation comes with further investments from the likes of Janus Capital Management, Japanese e-commerce company Rakuten Inc., and Saudi Arabia’s Kingdom Holding Co.

Lyft, Uber’s smaller rival just got a helping hand that could make its competition with the San Francisco, California company easier.