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Tue 5 Jan 2016 03:51 PM

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Alwaleed-backed app firm signs $500m deal for 'self-driving' cars

Lyft, a major rival to Uber in the US, has struck the deal with General Motors

Alwaleed-backed app firm signs $500m deal for 'self-driving' cars

An American ride-hailing firm in which Saudi Arabian billionaire Prince Alwaleed invested $100 million last month has signed a deal with General Motors to develop a network of self-driving cars.

Lyft, a privately held transportation network company based in San Francisco, makes a smartphone app that facilitates peer-to-peer ridesharing by connecting passengers who need a ride with drivers who have a car.

The firm confirmed last month its latest $1 billion fundraising drive included $100 million from Alwaleed’s Kingdom Holding Company. One of the other major investors, General Motors (GM), which injected $500 million, on Monday laid out plans to develop an on-demand network of self-driving cars with the ride-sharing service, Reuters reported.

The two companies said the partnership was based on the shared view that self-driving cars will first reach consumers as part of a ride-sharing service, rather than vehicles owned by drivers.

"We think our business and personal mobility will change more in the next five years than the last 50," GM President Dan Ammann said in an interview with Reuters.

The partnership will tap into GM's work on driverless cars and Lyft's software that matches drivers and passengers and calculates routes, to create a network of cars that would operate themselves and be available on demand.

The two companies did not set out a timeline to get the on-demand network up and running, but said they would immediately offer Lyft drivers short-term rentals of GM cars.

The announcement came as Toyota and Ford said they would adopt the same software to link smartphone apps to vehicle dashboard screens.

Two of the world's biggest automakers, they invited rival car companies to join them to counter the push by Apple, Alphabet, Tesla Motors and others into self-driving cars, or what the industry calls autonomous vehicles.

Last month, Ford chief executive Mark Fields also said the No. 2 US automaker would explore the ride-hailing business with a fleet of specially designed Transit vans at its Dearborn, Michigan campus.

Lyft said the latest funding round valued it at $5.5 billion, cementing its status as one of Silicon Valley's much-prized 'unicorns,' or companies worth more than $1 billion without going public. Lyft does not publicly disclose its financial performance, but media reports have suggested it is not profitable, like many tech startups.

Lyft is locked in a fundraising race with rival ride-hailing app Uber, which counts the Qatar Investment Authority among its backers. Lyft said it has raised a total of $2 billion since August 2013. Uber is reportedly in the midst of a $2.1 billion funding round that would value it as high as $64.6 billion.

* With Reuters

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