GM Invests $500M in Lyft for On-Demand Driverless Cars

Five years ago, a $500 million investment in a ride-hailing service that aspires to use driverless cars would have sounded bizarre. At that time, Uber was a young startup worth just $60 million and Lyft, its closest U.S. competitor, hadn’t even launched yet.

Nowadays, the two companies are both valued in the billions—Uber at over $60 billion and Lyft at $4.5 billion—and a recent McKinsey report predicts that driverless cars will make up 15 percent of the global automotive market by 2030. As both of these technologies have matured, their potential combination has become an alluring prospect: the end of car ownership, replaced by a circulating fleet of driverless cars, waiting to be summoned by a smartphone request.

With that in mind, it’s not so startling that on Monday, Lyft announced that it had received a $500 million investment from General Motors, and that the two companies would be partnering to work on developing a network of on-demand driverless cars. Under this partnership, GM will also start providing cars for Lyft’s planned rental hubs, which would lets its drivers work without owning a vehicle.

Although Google is usually the first company to come to mind for driverless car R&D, GM has been in the driverless-car game for years, having partnered with Carnegie Mellon in 2007 to win the DARPA Urban Challenge, an autonomous-vehicle race. 

The company has also dipped into ride-sharing: Last year, it partnered with Google to launch an experimental ride-sharing app. A handful of other car companies, including incumbents (like Ford) and upstarts (like Tesla), have also looked into developing driverless cars. Uber has shown itself to have quite an appetite for this research as well.

It’s true that, as some have noted, getting rid of drivers altogether is a convenient way of solving the labor issues that have been plaguing both Lyft and Uber. (And in the shorter term, as The Consumerist  points out, those Lyft-GM hubs might not work out well for on-demand workers if the cost of renting a vehicle is too high.)

Beyond labor concerns, another major question for these services is whether regulators will permit truly driverless cars in the first place. In December, regulators in California proposed rules that would require a licensed human driver onboard at all times, in case of an emergency. If such laws become commonplace, Lyft may need “drivers” for a long time to come.