Ridesharing service Lyft has raised $1 billion in its latest funding round, with General Motors (GM) sinking $500 million into the San Francisco-based startup.
The car maker's investment has been labelled a long-term strategic alliance by both parties with the pinnacle objective of the partnership to co-develop a network of on-demand autonomous vehicles -- a fleet of driverless cars ready to take passengers from A to B.
John Zimmer, Lyft's president and co-founder, has grand plans for the future of his startup, saying the future of transportation is changing rapidly. He said his company will work with GM to build a network of autonomous vehicles to make getting around more affordable, accessible, and enjoyable.
"Working with GM, Lyft will continue to unlock new transportation experiences that bring positive change to our daily lives," he said. "Together we will build a better future by redefining traditional car ownership.
"We are thrilled to take this momentum into the New Year and continue improving life in our cities through more affordable, accessible, and enjoyable transportation."
But before a chauffeur-less car accepts an in-app ride booking and before passengers chance their life in the hands of a smart vehicle, GM is leveraging Lyft's platform to stay relevant and profitable.
A recent report on the vehicle industry by McKinsey suggests incumbent automakers are likely to evolve to become software and mobility providers as they chase additional revenue streams based on services and customer data in the years ahead.
As a result, GM's investment comes with short-term gains.
GM will take up residency on Lyft's board of directors and will effective immediately establish short-term rental hubs throughout the United States for Lyft drivers that do not own a vehicle. Lyft said this will unlock new ways for people to earn money without having to own a car.
The pair also said they will provide each other's customers with personalised mobility services and experiences through their respective channels, and Lyft drivers and customers will have access to GM's portfolio of cars and OnStar services which cover vehicle extras such as security and safety features, turn by turn navigation, and Wi-Fi.
"We see the future of personal mobility as connected, seamless, and autonomous," GM president Dan Ammann said. "With GM and Lyft working together, we believe we can successfully implement this vision more rapidly."
Kingdom Holding Company accounted for $100 million of Lyft's latest funding round, which sees the Saudi Arabia-based investor sinking an approximate total of $250 million into the ridesharing platform. Janus Capital Management, Rakuten, fellow ridesharing service Didi Kuaidi, and Chinese retail giant Alibaba also accounted for the $400 million funding balance.
According to Lyft, the latest funding round sees the startup valued at $5.5 billion post money, with $530 million previously secured in March. Its main competitor however, fellow San Francisco startup Uber, was sitting on a $51 billion valuation as of November last year.
In direct response to Uber, Lyft alongside fellow ridesharing services Didi Kuaidi, GrabTaxi, and Ola last month rallied to form a partnership to tap each other's network and jointly offer services.
At the time, the foursome said their collaboration meant their services would reach almost all of Southeast Asia, India, China, and the United States, touching nearly half of the world's population. The collaboration expands on a previous agreement formed between Lyft and Didi Kuaidi in September 2015.
Also in September, researchers at Deakin University partnered with GM to focus on developing "innovative and competitive" solutions for the future of the automotive market.
Deakin said the centre would develop technology-driven automotive products and the initial focus of the new centre will be to develop advanced constitutive and failure models, including calibration test procedures, before implementing the models into commercial software.
Almost a year ago, GM's chief technology officer Jon Lauckner said his company was open to the idea of collaborating with Google on developing autonomous vehicle technology.
At the time, Lauckner said many people who are currently working on Google's autonomous vehicle program have worked with GM in the past, and he would be "completely surprised" if Google did not have a strong contribution to give to autonomous vehicle research and development.
In a space previously dominated by tech companies like Google, other traditional car manufacturers also have their hand in the autonomous vehicle pie.
Japanese car manufacturer Nissan said it will have road-ready autonomous cars by 2020; Hyandai also said it was pushing for commercial self-driving cars within the next five years; and Ford announced it was moving its autonomous driving technology research plans upward to a full-scale advanced engineering program, signing a partnership with Pivotal Software last month to develop applications on Cloud Foundry, and connect its various mobile and auto experiences.
Uber is also making waves in the space. It gave $5.5 million to Carnegie Mellon University (CMU) in Pittsburgh, Pennsylvania last year to drive its autonomous car development, in a bid to focus on technology developments to improve customer safety. The investment was said to fund research and development, primarily in the areas of mapping and vehicle safety and autonomy technology.