As much as it might sound like crazy talk here in the Motor City, transportation tastes are shifting. Big companies see transportation as we know it changing. For various reasons, the number of people buying cars that are between the age of 18 and 34 has fallen by almost 30 percent, and only 54% of teens are getting their drivers licenses before turning 18.
There has been a lot of activity around technology and cars as of late.
Just a few weeks ago it was leaked that Ford and Google are creating a joint venture to be announced at the Consumer Electronics Show in Las Vegas to create self-driving cars – and now, General Motors and Lyft have announced a self-driving joint venture of their own.
It’s a $500 million investment by GM, that along with other partners puts Lyft’s raise announced Monday at $1 billion. Still, Lyft’s valuation is much less that competitor Uber. Lyft’s value is up to a nice $5.5 billion, but Uber sits at a valuation of $62.5 billion.
For comparison, the enterprise value of General Motors sits at a little under $88.5 billion as of today.
So what are the details? There are two main components. the development of autonomous vehicles, and hubs where Lyft drivers can get access to vehicles. According to the Lyft blog:
We will work with GM to build a network of on demand autonomous vehicles that will make getting around more affordable, accessible and enjoyable. GM will also establish a series of national rental hubs where Lyft drivers can access short-term vehicles, unlocking new ways for people to earn money without having to own a car.
“We see the future of personal mobility as connected, seamless and autonomous. With GM and Lyft working together, we believe we can successfully implement this vision more rapidly,” said GM president Dan Ammann.
There isn’t a specific timeline on when you will be able to call the on-demand car service and the vehicle may not have a human driver. But it sure is an interesting concept. Options like Wi-Fi and TV in the car are coming – services that are much more enjoyable if you don’t have to drive.
In addition, GM will hold a seat on the company’s board of directors, as well as Lyft drivers and customers will have access to OnStar services.
It’s the beginning of a shift in business model that is following the shift in customer demand. Historically, General Motors and other automakers are in the business of selling cars to individuals. The average U.S. household spends more than $8,600 per year to own and operate one vehicle – a cost that many would like to trim, but practically can’t in many places.
Long term, the goal is that GM will build their self-driving fleet of cars that are owned by the company, and not bought but instead rented or leased by consumers; or available on a per-trip basis.
“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,” Ammann told the New York Times.
One can only imagine what kind of impact these expected changes will have on the local Detroit economy, and how businesses and entrepreneurs here are going to respond to it.