Why Ford and Lyft Are Teaming Up on Self-Driving

Ford Motor Company (NYSE: F) and Lyft are teaming up: The Blue Oval and the fast-growing ride-hailing company said they will work together to develop self-driving vehicles optimized for use in ride-hailing service.

Ford is the latest in a growing list of companies to team up with Lyft on projects related to autonomous vehicles. Here's what we know, and what it means for the key players.

What the companies said about the deal

Ford and Lyft each announced the deal in separate blog posts. This paragraph from Lyft's post captures the gist of the deal:

Sherif Marakby, who leads Ford's autonomous-vehicles program, went into a little more depth in a post on Medium:

Marakby said Ford is hoping to refine its ability to connect smoothly with a ride-hailing dispatch platform, and to better understand what kind of infrastructure it will need to develop to service and maintain a fleet of autonomous vehicles in ride-hailing service. Ford will also use the data it collects with Lyft to figure out which cities would most benefit from a self-driving vehicle service, Markaby said.

What it means for Lyft: Another big-name self-driving partnership

Ride-hailing giant Uber Technologies has its own in-house self-driving research and development effort. Lyft doesn't. Instead, Lyft offers other companies that are working on self-driving technology the opportunity to run test vehicles in its service, accumulating miles and data in real-world service and learning how Lyft's dispatching systems work.

The other companies that have signed up to test self-driving vehicles with Lyft include:

  • Massachusetts-based start-up nuTonomy, which said in June that it would put several of its test-fleet vehicles into service with Lyft.
  • Indian automaker Tata Motors' (NYSE: TTM) U.K.-based luxury-vehicle subsidiary Jaguar Land Rover, which invested $25 million in Lyft in June.
  • Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Waymo subsidiary, which has a large fleet of test vehicles well-suited for ride-hailing service (they're modified Chrysler Pacifica minivans). 

Of course, General Motors (NYSE: GM) is almost certainly in the mix here as well. GM invested $500 million in Lyft in 2016, and it has said it will soon begin building a large fleet of self-driving Chevrolet Bolt EV test vehicles that could be destined for Lyft service.

What it means for Ford: A shift in strategy underway?

This deal is another sign that new Ford CEO Jim Hackett might be ramping up the company's efforts in advanced technologies, including self-driving. Ford recently announced a new partnership with Chinese automaker Anhui Zotye Automobile to build electric vehicles in China, and there have been other moves -- including the hiring of Marakby away from Uber Technologies -- that suggest Hackett is putting more emphasis on advanced technologies.

Hackett is expected to reveal his plan for Ford in a presentation to Wall Street analysts next week. We'll learn much more then.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Alphabet (A and C shares) and Ford. The Motley Fool has a disclosure policy.