As ride-sharing companies expand their presence on the world’s roadways, traditional automakers are quickly lining up to invest in them in the hopes that the innovative technology companies will prove a boon to their bottom lines.
Toyota Motor Corporation became the latest automobile manufacturing titan to throw its hat into the ring, agreeing to a trial partnership with Uber as well as a small investment in the service’s day-to-day operations.
Innovative Financing Options
Although the minor details of the deal remain unclear, the temporary ideological centerpiece appears to be an innovative car financing scheme that would allow consumers to lease Toyotas and then pay off their account balances by driving for Uber. The concept appears to be the first of its kind, and the success or failure of the pilot program will certainly have a massive impact on the future of automobile marketing, car ownership and acquisition of mobility services. This could be very helpful for new car owners. These individuals are not thinking of how to recycle their car at the end of its life, but looking for ways to pay it off.
A Cascade of Collaboration
In the last four months, several high-profile carmakers have partnered with ridesharing companies, and the partnerships have been extensively covered in the media. General Motors was one of the first major manufacturers to heavily invest, agreeing to a $500 million deal with Lyft, Uber’s main rival in the United States. Among other things, the deal intends to focus on the eventual creation of a self-driving, on-demand fleet of taxis.
General Motors’ main rivals have quickly followed suit: most notably, Volkswagen recently inked a $300 million partnership deal with Gett, a smaller rideshare service active in many major cities and founded by entrepreneurs in Israel. In a major surprise, technology giant Apple invested close to $1 billion in Chinese ride-sharing company Didi Chuxing. Experts are unsure of the motives of this move by Apple; many have surmised that the deal is either a political maneuver designed to gain access to a greater percentage of the Chinese market, or a direct challenge to the global supremacy of Uber. Didi Chuxing claims that it has up to a 90 percent market share in China, so the partnership is certainly worth a closer look over the next few years.
Possible Motives for Automakers
The potential motives for car companies to engage in these types of deals are numerous. The industry titans may simply be trying to feel each other out — up until the past few months, the traditional auto industry had little to no public contact with ridesharing services like Uber and Lyft. After witnessing the massive growth of these upstart companies, automakers evidently feel that smaller investments are worth the risk. So far, none are heavily investing: Toyota has been forthright in saying that the deal is structured to allow for an easy exit, and insisting that the primary purpose of the partnership is a mutual dialogue about the future of transportation.
However, from a purely business standpoint, it would appear that the traditional car ownership model that manufacturers subscribe to is in direct conflict with the stated goals of Uber management. Upper management at the company has repeatedly claimed that an intended side effect of the global ridesharing revolution is to reduce the personal ownership of automobiles. This goal has been variously attributed to a desire to positively impact the environment, decrease the amount of accidents and drunk driving deaths on roadways, and focus public investment on public transportation systems rather than roadways.
In any case, car companies appear to be willing to hedge their bets. The possibility of a self-driving taxi service appears more realistic than it ever has before, and rather than be completely left out of the new economy, some manufacturers are angling to be at the bargaining table. Toyota and General Motors have certainly joined the table, and other manufacturers like the Ford Motor Company have expressed interest in following suit.
An Uncertain Partnership — And Future
Seamlessly synthesizing the interests of clunky, old economic giants with the interests of streamlined, New Economy tech startups is unlikely to be an easy task, but Toyota and Uber are tentatively coming together to explore possibilities for collaboration in the future. The direction of the automobile industry and the sharing economy could hang in the balance.