GM & Lyft Announce $500 Million Partnership To Build Autonomous Car Network & More

January 4, 2016

Follow the money: it's good advice for anyone who's curious about the future of politics, science, technology, or any other field.

Today, General Motors and Lyft announced a new $500 million partnership that could hint at the future of the auto industry.

If you remember GM's joint venture with the car-sharing service RelayRides, you might think that GM simply wants to diversify its investment portfolio by buying up a piece of the world's #2 ride-sharing company. But that's not quite what's going on here.

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No, what's going on is similar to the deal proposed to Tesla by Uber CEO Travis Kalanick last summer. In case you missed it, Kalanick offered to buy every autonomous car Tesla builds in 2020. (For what it's worth, Tesla CEO Elon Musk believes that his company will be able to upgrade its current Autopilot system to provide fully autonomous vehicles by 2017.)

In this case, GM says that it has partnered with Lyft on "a long-term strategic alliance to create an integrated network of on-demand autonomous vehicles in the U.S." Per the agreement, GM will invest $500 million in Lyft, which the company will use to grow its ride-sharing business. In exchange, GM will take a seat on Lyft's board of directors.

The two will also begin collaborating on four important initiatives. Some of those will begin to bear fruit soon, others will take years to materialize. As GM notes in a press release, the four projects are: 

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.

Connectivity: Lyft drivers and customers will have access to GM’s wide portfolio of cars and OnStar services, leveraging two decades of experience in connectivity. This will create a richer ride-sharing experience for both driver and passenger.

Joint Mobility Offerings: GM and Lyft will also provide each other’s customers with personalized mobility services and experiences through their respective channels.

What, exactly, does all that mean? The details haven't been revealed in full, but it appears that Lyft is moving even further in the direction of a "gig economy" company by amassing its own fleet of vehicles, which Lyft drivers can contract for use. 

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More importantly, the agreement signals that GM is growing far more aggressive about its autonomous car plans. Down the road, it appears that GM will be supplying some, if not all of the vehicles in Lyft's future fleet of self-driving cars. GM has been less vocal than some of its competitors on the subject of autonomous vehicles, so for GM fans, this is a welcome change.

Will GM's investment pay dividends? It's entirely possible. As the world's population continues to move toward cities -- often those with strong mass transit systems -- and as Millennials continue to eschew car ownership, ridesharing outfits like Lyft may become the most valuable transportation companies on the planet. Should that come to pass, this investment could keep GM sitting pretty for some time to come. 

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