General Motors invests $500M in Lyft, forms partnership

GM isn’t the only automaker with an eye on Lyft.

“We see the future of personal mobility as connected, seamless and autonomous”, the Business Times quotes GM President Dan Ammann as saying.

“Lyft has built a strong business with fast growth and we believe in their long-term success”, Alwaleed said in a release.

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.

GM gets a seat on Lyft’s board and access to the three-year-old company’s software, which matches riders with drivers and automates payments.

GM and Lyft did not provide a timeline for this on-demand network.

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Lyft has grown rapidly in recent years, thanks in part to its ability to spend on new products like Lyft Line, a carpooling service that reduces costs for consumers. In the long-term, however, I see this alliance taking away from those who depend on Lyft as a source of income – regardless of how significant that income is.

General Motors shares were down 2.4% after the announcement Monday morning among a larger general market selloff.

Thomson ReutersAmmann, President of General Motors, poses after a news conference in Sao Paulo SAN FRANCISCO (Reuters) – General Motors Inc and Lyft Inc Monday announced an alliance to develop an on-demand network of autonomous vehicles as well as a $500 million investment by the automaker as part of a $1 billion fund-raising round by the ride-sharing service. In addition, GM will hold a seat on the company’s board of directors.

“We see the world of mobility changing more in the next five years than it has in the last 50”, Ammann said.

Lyft co-founder and President John Zimmer and Ammann say the two companies began serious discussions about three months ago.

Autonomous On-Demand Network: The joint development of a network of on-demand autonomous vehicles will leverage GM’s deep knowledge of autonomous technology and Lyft’s capabilities in providing a broad choice of ride-sharing services.

Rental Hub: Beginning immediately, GM will become a preferred provider of short-term use vehicles to Lyft drivers through rental hubs in various cities in the U.S. In 2011, GM invested $3 million in RelayRides and teamed up to let GM owners rent their cars to other drivers through the OnStar connectivity system. This will create a richer ride-sharing experience for both driver and passenger. Uber is reportedly in the midst of a $2.1 billion funding round that would value it as high as $64.6 billion.

Lyft now faces tough competition from its main ride-hailing service rival Uber, which is valued at $62.5 billion.