GM invests $500M in ride-sharing company

Associated Press

DETROIT

The automotive industry is placing its biggest bet yet that using a device to hail a ride – with or without a driver – is the future of transportation.

General Motors Co. said Monday it is investing $500 million in ride-hailing company Lyft Inc. and forming an unprecedented partnership that could eventually lead to on-demand, self-driving cars. It’s the largest investment yet by a traditional automaker in a new mobility company, and is an acknowledgement by GM that the transportation landscape is changing fast.

“We see the world of mobility changing more in the next five years than it has in the last 50,” GM President Dan Ammann told The Associated Press in an interview.

GM made the investment as part of a $1 billion round of fundraising by Lyft.

Together, the companies plan to open a network of U.S. hubs where Lyft drivers can rent GM vehicles at discounted rates. That could expand Lyft’s business by giving people who don’t own cars a way to drive and earn money through Lyft. It also gives GM a leg up on competitors such as Daimler AG and Ford Motor Co., who are developing their own ride-sharing services. And it would put more young drivers behind the wheel of a Chevrolet, Buick, GMC or Cadillac.

Longer term, GM and Lyft will work together to develop a fleet of autonomous vehicles that city dwellers could summon using Lyft’s mobile app. Partnering with GM could give Lyft a boost over its archrival, Uber Technologies Inc., which is working on its own driverless cars.

Karl Brauer, an industry analyst with Kelley Blue Book, expects to see automakers and tech companies form more partnerships over the next few months.

“Each one has an area of specialization to make both of them stronger,” he said.

GM isn’t the only automaker with an eye on Lyft. Fontinalis Partners – a venture capital co-founded by Ford Motor Co.’s Executive Chairman Bill Ford – invested in Lyft last May. The amount invested wasn’t disclosed.