GM to compete directly with Uber and Lyft

posted at 5:21 pm on January 21, 2016 by Jazz Shaw

With the success of ride sharing services like Uber, I’m sure they expected some competition. But instead of another young app developer from Silicon Valley, they probably didn’t expect to be challenged by General Motors. I’ll confess that I did a double take when I saw the headline because, well… why would a car manufacturer care about who is driving their vehicles or using them as cabs? (Beyond some possible advertising purposes anyway.) As it turns out, they’ve got an eye toward a future where people aren’t as interested in owning cars. (Yahoo News)

GM is launching a “personal mobility” service called Maven that will kick off in Ann Arbor and spread to other major U.S. cities throughout 2016. Participants will use a smartphone app to locate GM vehicles for rent at parking spots throughout the city, unlocking the car using the app and a wireless connection to the car, instead of a key. The service is a blend of Uber, Zipcar and bike-sharing programs in many cities, since it allows users to find a short term rental closes to them using an app.

GM also invested $500 million in the ride-sharing company Lyft recently, while also scooping up the remnants of Sidecar, an early ride-sharing venture that failed for lack of funding. GM president Dan Ammann will sit on Lyft’s board and oversee GM’s new ride-sharing projects.

GM is talking about the decline of the “ownership model” in America, particularly among younger and urban dwelling consumers. It’s not that they expect private owners to stop buying cars entirely, but in large segments of the market there are plenty of people who are already doing away with the parking hassles and other related expenses that come with having a car. For such consumers, a single day (or even four hour) rental of a vehicle on occasion works out to be far cheaper than car payments, insurance, parking fees and all the rest. If you add into that the appeal of having an app that will direct you to a car which is parked in your neighborhood and can be unlocked and started with your phone… well, that’s a pretty appealing marketing pitch. Further, if they can cash in on the ride sharing idea by getting a cut of it through providing the vehicles that the drivers commute in, it works out to another revenue stream.

At first glance this sounded kind of silly for a major auto manufacturer, but the more I read about it the more it made sense. It might even challenge Uber more effectively than somebody starting what would essentially be a copy cat service. The big expense for prospective Uber drivers is having a car that passes muster for the service. When the service starts with providing the car, the direct pay for a driver may go down, but so do their expenses. Personally, I think I’d be tempted to use a service like this so GM may be onto something here.

UberCab


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Comments

The more players in the game, the better.

whatcat on January 21, 2016 at 5:24 PM

At first glance it seems to be a good idea. I suspect there will be issues with availability when it does start which could turn people off, especially if a car isn’t sitting there gassed and ready the minute they want it.

Johnnyreb on January 21, 2016 at 5:38 PM

How is this different than zipcar?

NoVAHockey on January 21, 2016 at 5:45 PM

Zipcar is brilliant – I have used it in multiple cities – to rent cars, trucks and vans.

Pork-Chop on January 21, 2016 at 5:47 PM

I can see two issues.
1. Cleanliness of vehicles may be a problem. Imagine a complaint about a Coney Island Whitefish on the backseat.
2. Free Car Giveaway as soon as a Smartphone app hack occurs.

TBVet on January 21, 2016 at 5:47 PM

If GM is sinking in $500 million into Lyft and gets a seat on their board, it doesn’t appear that they’re directly trying to compete with Lyft, as the headline suggests…

Hostile Gospel on January 21, 2016 at 5:50 PM

A lot of the reasons people use Uber or Lyft is because they don’t want to drive( usually drinking or lack of parking at certain places).

My daughter is (was) a big user of Uber. After her trip to the Madonna concert last night, and the jacking up of the price ( $15 there, $75 home) she is switching to Lyft.

Barred on January 21, 2016 at 5:50 PM

The insurance liability has to be insane. If the driver doesn’t have a policy in force. Even if they do, expect to see carve outs in personal auto policies from most insurers.

With the ride services, the drivers have covered the insurance costs. Their driving records are known, and the insurers can base their rates on that. Unknown drivers jumping from car to car with questionable driving records will be expensive to cover.

juanito on January 21, 2016 at 5:51 PM

Maybe they can repay the taxpayers first.

HumpBot Salvation on January 21, 2016 at 5:54 PM

Guess where most GM cars are made today? …

DarkCurrent on January 21, 2016 at 5:54 PM

My daughter is (was) a big user of Uber. After her trip to the Madonna concert last night, and the jacking up of the price ( $15 there, $75 home) she is switching to Lyft.

Barred on January 21, 2016 at 5:50 PM

75 bucks? Was the concert in another country?

whatcat on January 21, 2016 at 5:55 PM

I was watching shark tank the other night and one of the sharks predicted this. I’ve recently moved to a downtown area. My job is 4 blocks away and my gym is 3 blocks away. I generally take an uber when I go to sporting events or out for nights on the town. I would definitely prefer something like this as opposed to the monthly car note, insurance, gas and cost of parking that I have with owning my own personal car now. I definitely see the market for this.

On Shark tank the argument that was in the future only the super rich will have cars and parking was a big reason why. I know in Seattle they moved free parking from 6pm till 8pm now so alot of people have to pay for parking when they get home and I see that getting worse and worse. I can see a day coming when they’re wont be free parking anymore and people have to feed the meters all night just like people who work downtown during the day do now.

Politricks on January 21, 2016 at 5:56 PM

Sounds like Mercedes-owned car2go service. It uses blue and white Smart cars.

RustyMN on January 21, 2016 at 5:57 PM

75 bucks? Was the concert in another country?

whatcat on January 21, 2016 at 5:55 PM
_______________

They raise it during peak times. But they give you a warning before you order a cab and they give you an option to wait until peak times are over. Lyft does the same thing. OP Tell your daughter just not to order one during peak times next time.

Politricks on January 21, 2016 at 5:58 PM

If it’s hip and GM is investing in it, then it must be gold!

Don’t pay any attention to that whole ‘Volt’ fiasco.

Deafdog on January 21, 2016 at 6:03 PM

a future where people aren’t as interested in owning cars.

So the plan, as outlined at the link.
1) you sign up.
2) you “rent” a car, if there is one, near where you are.
3) you leave the car wherever you’re done with it.

Um… this is a brilliant plan. if travel is even in all directions; and you’re not dealing with humans who will make a mess; not clean it up, and screw up anything when they can’t be directly blamed.

Basically; this is the “if we assume a spherical chicken of standard consistency in a vacuum” style solution.

Looks like it might work on paper; has no chance of ever being slightly plausible in reality.

gekkobear on January 21, 2016 at 6:19 PM

I don’t get how putting $500 million into Lyft makes GM a “competitor” of Lyft. Sounds like they’re a major partner.

BTW if you haven’t tried Lyft or Uber yet – it’s the death knell of taxis. You can read reviews of the drivers and know to the second when they’re arriving, know how much the fare will be, no money transactions between you and the driver, and the route is all shown on the map before you leave. Why would anyone want to get in a shady, overpriced cab anymore? Taxis are doomed, and with GM money behind such ventures, even the taxi monopolies won’t be able to stop the change.

DarthBrooks on January 21, 2016 at 6:35 PM

I’ll always bet against GM and win unless Obama comes in and makes it a not fair.

jukin3 on January 21, 2016 at 6:36 PM

So the plan, as outlined at the link.
1) you sign up.
2) you “rent” a car, if there is one, near where you are.
3) you leave the car wherever you’re done with it.

gekkobear on January 21, 2016 at 6:19 PM

red green show already did this using golf carts :)

dmacleo on January 21, 2016 at 6:37 PM

With the ride services, the drivers have covered the insurance costs.

No they don’t. Nobody who drive for Uber X is legal. They are all breaking the law and breaking their insurance policy terms and conditions. No private insurance policy allows one to use their car as a taxi service and all cities require a taxi license to accept rides.

I was looking to drive for Uber until I found out it is totally illegal. In my city, you need a taxi license to use your car for hire, and you need commercial auto insurance. Very expensive. And if your insurance company finds out you were driving for Uber or Lyft, they will cancel your insurance, and it will you who will be calling Uber next.

HugoDrax on January 21, 2016 at 6:38 PM

Sounds more like a plan that a car rental company should do. Avis and Budget should get into this, since renting cars out is what they do. If GM did it, they would just make it so bloated, it would lose money. GM has no idea how to make money. GM is as good at operating at a profit as NASA is.

HugoDrax on January 21, 2016 at 6:41 PM

whatcat on January 21, 2016 at 5:55 PM

7 miles.

Politricks on January 21, 2016 at 5:58 PM

They did give her a quote, from &25.35. She even said she would have been willing to pay $35 to $40. She knows it jacks up during prime use. She was such a big user.

Lyft gives you the exact price before you get picked up.

Barred on January 21, 2016 at 6:44 PM

No they don’t. Nobody who drive for Uber X is legal. They are all breaking the law and breaking their insurance policy terms and conditions. No private insurance policy allows one to use their car as a taxi service and all cities require a taxi license to accept rides.

I was looking to drive for Uber until I found out it is totally illegal. In my city, you need a taxi license to use your car for hire, and you need commercial auto insurance. Very expensive. And if your insurance company finds out you were driving for Uber or Lyft, they will cancel your insurance, and it will you who will be calling Uber next.

HugoDrax on January 21, 2016 at 6:38 PM

That’s an incorrect generalization. Many states offer rideshare coverage that’s invoked when you are an Uber / Lyft driver and accept a fare. Nevada and California have many insurance companies that offer this service, and the changes are coming in places like Alabama and Illinois. Metromile is one such insurance company.

The days of the medallion taxis are going to end, and a lot sooner than Luddites would have us believe.

DarthBrooks on January 21, 2016 at 6:51 PM

I’m actually surprised Toyota hasn’t jumped on this, given how few Japanese own cars.

Count to 10 on January 21, 2016 at 6:52 PM

I’d have to question the driving skills of the young urban motorist who only drives for an hour or two, every other month or so.

Then there’s the breathalyzer that will need to be installed on all of these cars.

“Doing away with the ownership model” sounds a little socialist to me. What’s next time shared primary residences?

Oxymoron on January 21, 2016 at 7:06 PM

7 miles.
Barred on January 21, 2016 at 6:44 PM

Now that I think about it, I’d gladly pay 75 bucks to get away from a Madonna concert!

If I need a ride around town, the old-fashioned taxicab works for me. Got pretty good bus service, too, if I wanted to go on the cheap. Wouldn’t take one through the wrong sides of town, tho.

whatcat on January 21, 2016 at 7:07 PM

So the plan, as outlined at the link.
1) you sign up.
2) you “rent” a car, if there is one, near where you are.
3) you leave the car wherever you’re done with it.

Um… this is a brilliant plan. if travel is even in all directions; and you’re not dealing with humans who will make a mess; not clean it up, and screw up anything when they can’t be directly blamed.

Basically; this is the “if we assume a spherical chicken of standard consistency in a vacuum” style solution.

Looks like it might work on paper; has no chance of ever being slightly plausible in reality.

gekkobear on January 21, 2016 at 6:19 PM
————–

this model is already in use. they have your credit information on file so that usually leads people not to damage the goods. ZIPCAR and Bike sharing programs already use this method. It can be perfected.

Politricks on January 21, 2016 at 7:21 PM

All right, so I can rent a GM car for the day, and use it as my Uber car, driving people around. My only investment is my insurance. Brilliant!

Surellin on January 21, 2016 at 7:23 PM

HugoDrax

You didnt look hard enough.

https://newsroom.uber.com/56463/

I was actually in an accident while being a rider in an uber so I know from first hand knowledge what happened. The driver of the uber was not ticketed for “no insurance” as you claim, I was able to contact uber’s insurance company since the driver who hit the uber I was in was uninsured and ubers insurance paid my claim and they fixed the drivers car…so again..you may want to research a little further…now this may depend upon state but here in Washington…the driver and me the rider were totally covered even against an uninsured motorist.

Politricks on January 21, 2016 at 7:24 PM

They did give her a quote, from &25.35. She even said she would have been willing to pay $35 to $40. She knows it jacks up during prime use. She was such a big user.

Lyft gives you the exact price before you get picked up.

Barred on January 21, 2016 at 6:44 PM
_____________

So does UBER. For example when I leave my house to go to the stadium it gives me a range lets say 20-25. After the game when I go to look for a cab itll pop up in big print PEAK TIME 2.5 normal rates ( as an example) then I can still look at the range and I can do the math to figure out what it will be. It also tells me how long roughly peak times will last and it gives me an option to alert me when peak times are over. I have lyft on my phone right now and just typed in a random address and it also gave me a range..not an exact amount..again that may change by time/date/location/traffic/etc..

Politricks on January 21, 2016 at 7:28 PM

Politricks on January 21, 2016 at 7:24 PM

No, the law states where I live that you must have a taxi license to take rides for hire and you must have commercial auto insurance. The police already did a crack down on uber drivers last fall. The fines can be huge.

But the salient point is, no insurance company will allow you to drive for uber on your regular policy. For obvious reasons. Don;t believe me, ask your insurance company if they mind you driving your car around in a taxi service. Just ask. If they find out, you are screwed. You will be blackballed by the industry and then try getting insurance to drive your car.

Uber also requires that you go through your insurance company first. But if you do that, your insurance company will cancel your policy because in the fine print, it tells you you can’t use your car for hire. I just got new insurance this week, and that was one of the questions I was asked. You are not even allowed to carry goods in your vehicle for paid transport, much less people.

HugoDrax on January 21, 2016 at 7:36 PM

Laws vary by city and state… where I am, Uber is illegal, but cops don’t enforce the law, like spitting on the sidewalk. But should you get in an accident while in an Uber car (unless your driver has the insurance Politricks mentioned), it could go badly. Uber will say that they aren’t a taxi company, they are a TECH company… they are just an app, hooking up willing sellers with willing buyers, like EBay or Craigslist… if your transaction goes badly, they had nothing to do with it, and you guys have to work it out yourselves. But once Flo at Progressive learns the driver was operating a vehicle for hire, they will deny all claims, because he was operating a commercial vehicle without commercial insurance… sucks to be you…


Yes, Uber Sucks, And Let Me Explain Why

PointnClick on January 21, 2016 at 7:52 PM

Hugo…that’s my point though. I believe when you’re not for hire you’re covered by your own personal insurance. When you are for hire you’re covered by Ubers. I’ll have to look into it because that’s the ou thing that makes sense. I find it hard to believe that only you know this is illegal and hundreds of thousands of drivers are driving around uninsured and this has never come up before.

Politricks on January 21, 2016 at 8:08 PM

I just looked it up and that’s exactly how it works. When. You’re off duty you’re covered by your own insurane. When you’re on duty you’re covered by ubers. So there is no gray area or cross over. They provide a diagram here. https://www.uber.com/driver-jobs

Politricks on January 21, 2016 at 8:13 PM

I believe when you’re not for hire you’re covered by your own personal insurance. When you are for hire you’re covered by Ubers.

When you are for hire, you are still violating the terms of your insurance policy. Uber may say they will cover you, but only in a major accident, and only if your existing policy does not cover it, but if your insurance company finds out, they will cancel your policy, and if that happens, you are blackballed in the industry.

Yes, I believe that just about everybody driving for uber has no idea what they are doing is illegal.

Insurer cancelling policies of UberX drivers

HugoDrax on January 21, 2016 at 8:16 PM

I feel sorry for all you big city people. Can’t imagine having to use some app or rely on some other person to drive me, or share the transportation with some smelly bum or screaming children to get anyplace more than a mile away. (If I ever do need to take a taxi, I hope PointnClick is my driver:-)

I currently own seven…No, eight… operating motorized vehicles, with four more that I’m in various stages of building / re-building. (not all are ‘street legal’ or four wheeled). And I bet my insurance bill for all of them would be less than some of you city folk pay for one.

Haven’t had to pay a dime for parking in 18 years. Plenty of room on my own property to park 4000-5000 – maybe more- cars (although I might have to cut down a few trees to do it without scratching the paint in a few places.)

LegendHasIt on January 21, 2016 at 8:20 PM

Trust me on this Politricks, I asked Uber about this last fall when I was considering signing up with them. They never answered the question. The questions concerning insurance went unanswered.

Uber is a business model that is predicated upon illegal practices, which is why they have a price advantage. When your drivers don’t have to have a taxi license, and no commercial insurance, of course you can out bid the taxi companies.

In Toronto, the courts ruled that Uber as a tech company can operate. But the law does not allow the drivers to operate, that’s the irony. As a driver, you can not offer your car out for hire. Not only is it against the law, but your own insurance policy. The only legal Uber drivers are the taxi guys who have a license and commercial insurance. They take uber rides when they are not doing more profitable regular fares. All the Uber X people are taking a big risk.

HugoDrax on January 21, 2016 at 8:21 PM

In Toronto, the courts ruled that Uber as a tech company can operate. But the law does not allow the drivers to operate, that’s the irony. As a driver, you can not offer your car out for hire. Not only is it against the law, but your own insurance policy. The only legal Uber drivers are the taxi guys who have a license and commercial insurance. They take uber rides when they are not doing more profitable regular fares. All the Uber X people are taking a big risk.

HugoDrax on January 21, 2016 at 8:21 PM

Again, you’re taking a singular case and applying it to the entire system. Uber and Lyft may be illegal in Toronto, but they’re legal in Vegas and many other cities. The insurance issues have been worked out and the drivers activate their rideshare insurance when they pick up a fare. It’s happening in many metropolitan markets, and it’s only going to become more widespread as the service expands its user base.

DarthBrooks on January 21, 2016 at 8:30 PM

DarthBrooks on January 21, 2016 at 8:30 PM

It is not a single case. It is illegal throughout the entire country of Canada.

In the states, some companies have rideshare insurance, which is a brand new thing. How many drivers had that when they started driving? How many have it now? The vast majority are still operating illegally.

And this does not address the idea of operating a for hire service without a taxi permit. If the cops wanted to crack down on that, that is another kettle of fish.

HugoDrax on January 21, 2016 at 8:39 PM

If the idea fails then I guess the taxpayers can always bail them out like before, especially since they’re “too big to fail” with all those lobbyists.

if it’s successful though, expect all kinds of new laws pushed through Congress once the lobbyists get to work with the ole contributions – and assume any smaller players will be pushed out of the market.

This is how it all works these days – and the reason people are mad as hell and supporting candidates like Trump and Sanders who would normally be laughed off stage.

celt on January 21, 2016 at 9:05 PM

If GM is sinking in $500 million into Lyft and gets a seat on their board, it doesn’t appear that they’re directly trying to compete with Lyft, as the headline suggests…

Hostile Gospel on January 21, 2016 at 5:50 PM

Eric Schmidt sat on Apple’s board whilst Apple developed iPhone.

Brendon Carr on January 21, 2016 at 9:27 PM

One problem with this ananomous wide sharing. People don’t drive cars for mearly transportation
There’s also driving a car for the joy of it that. means driving a car for class or performance.

WC on January 21, 2016 at 10:13 PM

Yes, Uber Sucks, And Let Me Explain Why

PointnClick on January 21, 2016 at 7:52 PM

Thanks, that’s a good read.

whatcat on January 21, 2016 at 11:33 PM

2. Free Car Giveaway as soon as a Smartphone app hack occurs.

TBVet on January 21, 2016 at 5:47 PM

Or, “Free Getaway Car”. Imagine how much easier it will be to get a totally anonymous getaway car with this. No reports of it being stolen, no verifiable visual identification. Sounds great!

GWB on January 22, 2016 at 10:59 AM

Personally, I think I’d be tempted to use a service like this so GM may be onto something here.

Yeah. Me too.

And the missing point in the article AND the comments so far?

DRIVERLESS CARS, people.

They’re coming.

And what GM is setting in place is the infrastructure for a massive fleet. They’re planning on being their own best customer.

…I haven’t looked at a GM vehicle since the government fiasco, but this is the first time in recent memory I think they’ve bought a clue.

Their stock suddenly seems attractive to me.

…and I’d hire/rent one of those driverless offerings in a hot minute, all other things being equal.

davisbr on January 22, 2016 at 1:33 PM