GM Is Working With Lyft To Build An Army Of Self-Driving Cars

The auto giant invested $500 million into Uber's main U.S. rival.

General Motors just made a $500 million bet that people may someday stop buying or even driving their own cars.

The auto giant on Monday announced a deal with Lyft -- the chief U.S. rival to ride-hailing service Uber -- to develop a network of self-driving cars that can be summoned via an app.

"We see the future of mobility as connected, seamless and autonomous," Dan Ammann, GM president, said in a statement. "With GM and Lyft working together, we believe we can successfully implement the vision more rapidly."

This may mark the most aggressive move yet by any traditional automaker into the battle to perfect autonomous vehicles.

Daimler rolled out designs for a self-driving long-haul truck in May, two months after showing off its sleek Mercedes-Benz concept car (also driverless) around San Francisco. In July, the University of Michigan opened a fake town, where major car companies -- including Ford, Toyota and GM -- can test their autonomous software and vehicles. Lexus, Toyota's luxury division, plans to launch a self-driving feature by 2020.

Tech companies, by contrast, have made more ambitious strides.

Cash-flush Uber eviscerated Carnegie Mellon University's esteemed robotics department earlier this year, poaching nearly everyone -- including the director -- to develop the firm's self-driving technology. In November, Tesla Motors CEO Elon Musk said that beefing up the electric carmaker's self-driving program was "a super high priority." And all along, Google has been testing its bug-like autonomous vehicles on the streets of Mountain View, California.

Traditional automakers' reluctance to make bold moves is linked to the fact that self-driving technology could fundamentally undermine the auto industry's core business model: selling cars to people.

A driver uses a car only 5 percent of the time the vehicle is owned or leased, according to research by Donald Shoup, a professor with the University of California at Los Angeles. This means that, for the other 95 percent of the time, the vehicle remains parked. Consider that -- between insurance, fuel, tires and other expenses -- it costs on average $8,698 per year to own and operate a vehicle in the United States, according to a survey by the automotive services nonprofit AAA.

In April, Morgan Stanley auto analyst Adam Jonas published a provocative chart predicting that, eventually, only rich people would buy their own vehicles, and that everyone else would rely on Uber-like fleets of self-driving cars to get from place to place. Ride-hailing apps like Uber and Lyft may be luxuries now, but by eliminating the cost of a human driver, rates per mile would drop dramatically.

That could potentially make calling a private car cheaper than a ride on the subway.

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Morgan Stanley

This doesn't mean GM is getting out of the car-selling business. More cars than ever before were sold in the U.S. last year, and a surge in Chinese purchases drove global sales to a record high. In the short term, the GM-Lyft deal also means that the automaker's vehicles will be the go-to choice for Lyft drivers who rent service cars, and it opens the door to special offerings for GM and Lyft customers.

But most of all, GM can now say it has skin in a game that the traditional industry may be losing.

"Working with GM, Lyft will continue to unlock new transportation experiences that bring positive change to our daily lives," Lyft President John Zimmer said in a statement. "Together we will build a better future by redefining traditional car ownership."

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