Why General Motors is making a $500 million bet on Lyft

Ride-sharing app company Lyft today announced that it has raised $1 billion in new funding, including a $500 million investment from General Motors.

“Working with GM, Lyft will continue to unlock new transportation experiences that bring positive change to our daily lives. This raise and collaboration with GM are exciting milestones in our three-year history that continue Lyft’s leadership in redefining traditional vehicle ownership”, Lyft said in a statement.

“We see the future of personal mobility as connected, seamless and autonomous”, said GM President Dan Ammann in a press release issued by the vehicle company.

GM is investing $500 million in the ride-sharing service in the hopes of creating “short-term vehicle rental hubs”.

Major vehicle manufacturers are now trying to prevent Silicon Valley from dominating the future of self-driving cars and ride-sharing. He added that with Lyft and GM working hand in hand, we believe we will have success in implementing our vision quicker.

The future of cars-driverless or otherwise-is increasingly looking like one in which people don’t just stop driving, they also stop owning. But perhaps the most important part is the simplest – General Motors becomes Lyft’s preferred vehicle. In December, California’s Department of Motor Vehicles issued the first-ever regulations for self-driving cars requiring a driver to be behind the wheel of an autonomous vehicle at all times.

The partnership will provide a big boost to Lyft, which has generally played to second fiddle to fellow San Francisco-based startup Uber.

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

“Longer term, there are elements that GM is focused on and parts that Lyft is focused on”, Lyft President John Zimmer said in an interview with Forbes. That funding round would value Uber at $62.5 million.

Uber has been developing its own driverless cars with the help of Carnegie Mellon University.