GM Invests $500m in Lyft for Autonomous Car Alliance

General Motors Co. and ride-hailing company Lyft Inc. are forming an unprecedented partnership that could help them beat their rivals to the self-driving future.

Following Lyft’s latest round of fundraising, which included a $100 million investment from Saudi Arabia’s Kingdom Holding Co., privately-held Lyft set its value at $5.5 billion. An automated vehicle service is still a long way off, but in the meantime the companies will work on a network of rental hubs around the country where Lyft drivers can rent vehicles on a short-term basis. “This raise and collaboration with GM are exciting milestones in our three-year history that continue Lyft’s leadership in redefining traditional auto ownership”.

“We see the future of personal mobility as connected, seamless and autonomous”, said GM president Dan Ammann.

For GM, developing self-driving cars would allow them to challenge competitors like Google and Tesla, who have been dominating the autonomous vehicle market up to this point.

The deal is the first between a large automaker and a rideshare company and, according to Time, marks a further recognition in Detroit that transportation is on the verge of a “potentially massive paradigm shift”. Ammann will join Lyft’s board as part of the deal.

With $500 million from lead investor General Motors, the news is a massive curveball for people watching the scene around self-driving vehicles (SDV). He said his company will work with GM to build a network of autonomous vehicles to make getting around more affordable, accessible, and enjoyable. The latter company is also now working on autonomous vehicle research.

Lyft said Monday that it has closed all of that round. By adapting to the sharing economy, GM may be ensuring that it remains relevant in years to come.

General Motors’ investment in the Lyft is a portion of a $ 1 billion financing round for the startup. The announcement comes as Lyft closes a $1 billion funding round, half of which came from GM.