GM forges $500M alliance with ride-hailing service Lyft

January 5, 2016 12:36 PM

General Motors is betting big money that changes to the car market won't just be about which new models they build - they will be about how we get around, period.

The country's biggest automaker announced a $500 million "alliance" with Lyft, one of two remaining large competitors in the U.S. market for ride-hailing services. Lyft, in case you haven't heard of it, is a smaller competitor to Uber, which dominates the fast-growing market.

The deal with GM could be a game-changer.

Betting that ride-hailing is a big part of the future
Early indications are that the move is less an investment and more of a full partnership. The president of GM, Dan Ammann, will join Lyft's board under the terms of the alliance.

"GM sees a world where you use an app to call a driverless car."

Ammann told Bloomberg News that he expects the car industry to "change more in the next five years than it has in the last 50 and we obviously want to make sure we're at the forefront of that change."

Call a driver-less ride
While the partnership will have some effects right away - like GM's OnStar services being offered to Lyft passengers and drivers - it has the "gee whiz" goal of being the foundation for a future fleet of autonomous cars. GM sees a world where you don't just use an app to call a driver to your location. GM-made autonomous vehicles could be pulling up, sans driver, to take you where you want to go. As sci-fi as that might sound, the dreamers at GM and Lyft aren't alone. Uber has called for a similar network, and Google is working on one too.

David and (for now) Goliath
The deal is an enormous infusion of cash and prestige for Lyft. To put the size of the two main competitors for your ride-hailing business in perspective, consider this: Uber's value may be as high as $62.5 billion while Lyft has a valuation less than a tenth of that.

Of course that's just their relative size right now. These companies believe there's a huge future for ride-hailing and they'll be fighting tooth and nail to come out on top.

"Working with GM, Lyft will continue to unlock new transportation experiences that bring positive change to our daily lives," Lyft's co-founder and president, John Zimmer, said in a press release. "Together we will build a better future by redefining traditional car ownership."

If you drive for Lyft, Uber or some startup that will wipe those two off the map, it's important to keep your car in top shape with visits to your local car repair shop.

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