Smart move by GM to invest in Lyft – perhaps they see the disruption coming to the car ownership model that self driving cars will bring, and are hedging their bets. Interesting that Google gets all the press on self driving cars while Detroit is seemingly under emphasizing the future of self driving cars. A great article here on GM’s venture into the self driving cars.
The model for the future of cars is not only self driving – but renting on a per-trip basis. Essentially automating Uber. Statistics show cars go unused 94% of the time – sitting in the garage. So my prediction? Google (or some other ‘new-tech’ company’) will win the battle. The self driving car ‘disruption’ reminds me of a number of times in the past 20 years I have voted for the incumbent, dominant company. I recall a discussion with a co-worker – ‘why would you invest in Netflix when you can buy Blockbuster at a much bigger discount’. After all, Blockbuster had the customer base, inventory and retail presence. When Amazon went public in the 1990s at a huge premium, I thought ‘how can Amazon compete with entrenched booksellers – how hard can it be for booksellers to sell books over the internet?’
The problem is the entrenchment and lack of original thinking by the incumbents. The market leaders have to worry about protecting their existing business model for as long as possible – hampering the adoption of the technologies and business models.
Detroit seems to be in that category – I am sure margins are much higher selling cars to individuals and executives will fight to keep the existing model (and short term profits). Maybe GM’s tiny investment in Lyft shows there is some chance that they can re-invent themselves – but I am skeptical.