When you’re competing against a $51 billion (soon to be $62.5 billion) behemoth like Uber, it’s important to have some big friends backing you, otherwise you won’t stand a chance. Lyft understands this, and that’s why it’s decided to become friends with none other than General Motors, which has not only invested $500 million into the ride-sharing startup, but will also begin developing an autonomous on-demand network of self-driving cars for the company, something that Uber has been interested in as well. General Motors will also be setting up short-term rental hubs across the United States, where people who don’t have cars will be able to rent one for a short time and make money by driving for Lyft. The $500 million investment makes up half of Lyft’s recent funding round, which brings the startup’s valuation to $4.5 billion.
The founders of Lyft, the ride-hailing service, have long imagined that the future of transportation would involve fewer cars on the road. Now General Motors is helping the start-up reach that goal. Lyft announced on Monday that G.M. invested $500 million in the company, or half of its latest $1 billion venture financing round. The funding, which recently closed, values Lyft, which is based in San Francisco, at $4.5 billion. G.M.’s support includes more than financial backing. As part of the investment into Lyft, G.M. will work on developing a so-called autonomous on-demand network of self-driving cars, an area of research to which companies like Google, Tesla and Uber have all devoted enormous resources in recent years. G.M. will also work with Lyft to set up a series of short-term car rental hubs across the United States, places where people who do not own cars can pick up a vehicle and drive for Lyft to earn money. Daniel Ammann, president of G.M., will join Lyft’s board of directors. “We strongly believe that autonomous vehicle go-to-market strategy is through a network, not through individual car ownership,” John Zimmer, Lyft’s president, said in an interview. G.M.’s investment is a vote of confidence in Lyft, which faces a competitive ride-hailing field. Founded in 2012, Lyft helped promote the ride-sharing craze in the United States, positioning itself as a superior alternative to owning a car or using public transportation. Lyft users can summon a private or shared car with a few taps of an app.