Last week’s announcement of GM’s $500 million investment in Lyft may well be the turning point both the car and the software industry have been waiting for. Up to now innovation in the car industry has been driven by either carmakers or technology vendors, both working stand-alone on new initiatives. Innovation has been either focused on the car itself (from park assistance and infotainment systems to self driving or autonomous cars) or on mobility in general (shared service initiatives). This alliance seems to capture all spectrums of disruption in the automotive & mobility industry. Additionally it is not just a (sizeable) investment but an alliance where mutual interest and joint goals will be pursued. Where others in the industry still try to exclude IT vendors from the mobility scene, GM has chosen to join forces.
The GM/Lyft alliance is remarkable as GM is one of the first car vendors to step beyond car technology investments and look at the mobility experience for the customer as a whole, independent of which car is driven. There are numerous partnership announcements, but most of them focus on point products or stand alone solutions and stay within their own ecosystem. Not one has the depth and reach of the GM/Lyft alliance. Key elements of the agreement include:
- Development of an Autonomous On-Demand Network (ride sharing services)
- Rental Hub: GM will become a preferred provider of short-term use vehicles to Lyft drivers through rental hubs
- Connectivity: focused on a richer ride-sharing experience for both driver and passengers
- Joint Mobility Offerings: Personalized mobility services and experiences through their respective channels. [source GM]
To improve chances for success, GM’s Ammann will join Lyft’s board. In addition both companies state that: “culture and vision are very alike”.
The automobile industry is one of the industries highly impacted by the digitized transformation (read our related posts). Technology, and software in particular, is a crucial element for car and transportation services of the future. In this respect many in the automobile industry have made investments in innovation and technology.
But innovation entails more than enabling your car for Apple Carplay. Changes in the automobile industry surpass investments in safety, sustainability, comfort and design. The industry faces a digital makeover, where ‘mobility-as-a-service’ could replace the desire to own and maintain a car itself. And with this development it becomes questionable what it is that digitizes the automobile industry; the car or the software. There are several contenders.
There are the IT vendors like Google and Apple who are making significant investments in car technologies. Google for example has explored working with car makers and existing car models, but decided against this. They created their own partner network with electronics & automotive partners like Roush, Bosch, Continental and LG Electronics and developed an autonomous self driving car from scratch. They are complemented by silicon valley unicorns like Uber and Lyft. Companies able to digitize a service and build digital market share in an industry that seemed pretty much well cut out and divided to traditional and well established vendors.
At the same time, investments in technology from carmakers like Toyota, Ford and GM are also significant. Last year Ford opened its new Research and Innovation Center in Palo Alto. With an estimated 120 employees, one of the largest automotive research teams in the Silicon Valley area. Only last week at CES Ford announced its Smart Mobility Plan as well as 25 global experiments focused on mobility services. These plans include for example the introduction of the FordPass, an app that includes a marketplace with mobility services, guides, loyalty perks and info on the latest innovations (from Ford). Experiments include for example an on-demand car-sharing service pilot in London, or data driven initiatives as fleet insights. Ford and Toyota place their bets on their own developments,
Besides the technology vendors and IT vendors there is a third group making waves in this ecosystem – the IT suppliers to the car industry. Delphi for example has been a supplier of car technology for years, and is now also exploring the options to produce cars itself. Mobileye is a supplier of assisted-driving technology, and supplier to many car companies like Volvo, Nissan, Opel, Chrysler and BMW. Tesla is the odd one out, a car manufacturer, also supplying electric powertrain components to others in the industry. Tesla has adopted a completely different sales model. Ironically, in the route to mobility as a service – where physical ownership and presence are less important – Tesla is the first car manufacturer actually opening physical Tesla stores in malls.
Up to now the various parties have acted within their own ecosystem, making use of their own resources, albeit not shying away from recruiting each others’ employees. Their POV being that they all own the crucial core (being either the car or the technology). The truth is probably in the middle. The worlds are morphing together, either through stand-alone developments, acquisitions or partnerships.
The GM/Lyft alliance is remarkable as GM is one of the first car vendors to step beyond car technology investments and look at the mobility experience for the customer as a whole, independent of which car is driven.
GM and Lyft are the first ones to partner outside their own ecosystem. The combination will make it difficult to compete with and it is questionable whether competitors can get their act together as quickly as GM and Lyft. GM will have a head start with its electric cars (planned for production end 2016), and Lyft has built significant market share in the digital mobility service – at least in the US. But it is an alliance that sets an example. For Europe similar alliances between for example Volvo, Opel, BMW, Volkswagen and companies like SnapCar, BlaBlaCar, Heetch and Carpooling.com seem very likely. Joining forces makes GM and Lyft very well equipped to conquer what is considered the ultimate mobile market. And with $1billion pocket money to spend, there is room to play.
