Home / Technology / G.M., Expecting Rapid Change, Invests $500 Million in Lyft

G.M., Expecting Rapid Change, Invests $500 Million in Lyft

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From left, Logan Green, chief executive of Lyft; Daniel Ammann, president of General Motors; and John Zimmer, president of Lyft. Credit Lyft

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.

But Uber, Lyft’s largest and most formidable rival, has raised more than $ 10 billion to date, and it is valued at $ 62.5 billion, roughly 14 times Lyft’s new valuation. Uber operates in hundreds of cities in 68 countries. The company also operates its own research center for self-driving cars in Pittsburgh and is steadily recruiting engineering talent from Carnegie Mellon University as well as from competitors like Google, whose efforts on autonomous vehicle research have been well publicized.

Lyft and G.M. did not give a timeline for when they expected their autonomous vehicle network to become publicly available.

Lyft has been working to catch up to Uber. The company recently teamed up with ride-hailing competitors in Asia like Didi Kuaidi, Ola and GrabTaxi to expand. It has also struck deals with major brands like Starbucks and pop stars like Justin Bieber to broaden its reach.

The alliance with G.M. is surprising because automakers could consider ride-hailing companies like Lyft as long-term threats to auto sales. In an interview, Mr. Ammann said that G.M. wanted to be part of the changing business models in transportation.

“We think there’s going to be more change in the world of mobility in the next five years than there has been in the last 50,” he said.

Mr. Ammann noted that the core profit from G.M.’s business comes from cars sold outside the urban environments where Lyft primarily operates, especially sales of sport utility vehicles in suburban areas.

“From a G.M. perspective, we view this as much more of an opportunity than a threat,” he said.

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