Uber’s strongest competition Lyft has announced it has secured an investment of $500 million from General Motors Co, giving the ride-hailing startup a valuation of $5.5 billion and a major ally in the global battle against Uber Technologies Inc.
Bloomberg reported the investment, part of a $1 billion financing round for Lyft, is the biggest move by an automaker to date when it comes to grappling with the meteoric rise of the ride-hailing industry.
GM and Lyft said they will work together to develop a network of self-driving cars that riders can call up on-demand, a vision of the future shared by the likes of Uber Chief Executive Officer Travis Kalanick and Google-parent Alphabet Inc. More immediately, America’s largest automaker will offer Lyft drivers vehicles for short-term rent through various hubs in U.S. cities, the companies said in separate statements on Monday.
Ammann described the investment an “alliance” with Lyft. Rather than stay neutral in the battle between Uber and Lyft, GM invested because of the “level of integration and cooperation that will be required, particularly for the longer term nature of this,” he said in a phone interview.
Uber’s Kalanick, whose company has been investing aggressively in self-driving cars, has said that it could take between 5 and 15 years before such vehicles are meaningfully deployed around the country.
“We certainly see an opportunity to work together through those relationships,” Ammann said. “The U.S. is our home market and it continues to be our largest market and we think this is the right place to begin the journey.”
The partnership is a blow for Uber, which has fought to overwhelm Lyft, its only substantial U.S. competitor. Sidecar, another American rival, announced in December that it would shut its network.
