General Motors and Lyft announced an alliance to develop an on-demand network of autonomous vehicles as well as a $500 million investment by the automaker as part of a $1 billion fund-raising round by the ride-sharing service.
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The two companies said the partnership, which involves one of GM's largest investments in another company, stemmed from their shared view that autonomous vehicles will first reach consumers as part of a ride-sharing service, rather than vehicles owned by drivers.
"We had a really common view of the future" with Lyft, said GM President Dan Ammann in an interview with Reuters. Ammann will join Lyft's board as part of the deal.
In the same interview, Lyft President John Zimmer echoed that view, saying the "culture and vision are very alike" between the two companies.
Lyft said other investors in this fundraising round included Kingdom Holding Company, the firm of prominent Saudi investor Prince Alwaleed bin Talal which invested $100 million, Janus Capital Management, Japanese online retailer Rakuten Inc, ride-hailing service Didi Kuaidi and Chinese Internet giant Alibaba Group Holding Ltd.
"Lyft has built a strong business with fast growth and we believe in their long-term success," Alwaleed said in a release. Kingdom and Alwaleed are major investors in U.S. tech companies; together they own more than 5 percent of Twitter Inc, for example.
The GM-Lyft deal comes as automakers and Silicon Valley companies are exploring new alliances and new technologies that will reshape the global automotive industry.
"We think our business and personal mobility will change more in the next five years than the last 50," said Ammann.
GM and Lyft said the partnership would tap into GM's work on developing autonomous vehicles and Lyft's software that automates matching drivers and passengers, routing and payments to create a network of cars that would operate themselves and be available on demand.
GM and Lyft did not provide a timeline for this on-demand network. But they said the partners would immediately offer Lyft drivers short-term rentals of GM cars to use to offer the service.
Lyft said this latest funding round valued the company at $5.5 billion as it engages in a fundraising race with its biggest competitor, Uber Technologies Inc. Lyft said it has raised a total of $2 billion since August 2013. Uber is reportedly in the midst of a $2.1 billion funding round that would value it as high as $64.6 billion.
(Reporting by Stephen R. Trousdale)