Investors will get the opportunity to jump into the market of self-driving cars with the initial public offering of ride hailing company, Lyft. However, the company, along with its rival Uber Technologies Inc. will have to wait for a couple of years before a driverless robotaxi can be sent to a customer. It was reported on Thursday that Lyft is in the process of hiring an IPO advisory firm, which would be the first major step taken by the San Francisco-based company for getting publicly listed. A public valuation would be established by Lyft for ride services companies, which has remained quite elusive so far.
In the latest fundraising round, the value of the company came to be near $7.5 billion whereas Uber, its largest competitor, is currently valued at $68 billion. A lot of people have questioned whether Uber’s valuation is fair as the company has been involved in a lot of scandals in this year alone. A new and tentative timeline was set up by Dara Khosrowshahi, the new CEO at Uber, which was somewhere between the next 18 and 36 months. An IPO of a ride-services firm will put the beliefs of numerous auto industry insiders to test.
According to them, the numbers of individual auto ownership will decline as people would prefer to sell their vehicles in favor of ‘mobility services’ such as bike share, car share, ride services as well as self-driving vehicles. Some experts said that Lyft’s IPO would give an idea of how these mobility services would be valued in the future. Others said that Lyft’s public offering, a company that advertises itself as a friendlier version of Uber, would indicate whether these next-generation mobility services are truly as disruptive as claimed by private investors. Dozens of companies are currently testing and developing self-driving technology, although it is not yet ready to be used in the real world.
It is expected that self-driving cars would encourage people to give up their car ownership as it would boost the cost of vehicles and reduce the cost of a ride. According to estimates provided by auto industry executives, the cost of driving a mile in your individual car is somewhere between $0.60 and $1 whereas the charges of traveling a mile with ride-sharing services like Uber and Lyft is somewhere between $2.5 and $3. They believe that the cost would go down by two-thirds with the use of electronics and artificial intelligence in vehicles. It seems that Lyft is set on taking advantage of this changing trend and is looking to bet on it early.
If Lyft’s IPO turns out to be higher than its current valuation of $7.5 billion, it would turn out to be a major step towards self-driving vehicles. Lyft has already made agreements with several automakers including Tata Motors Ltd’s Jaguar Land Rover, Ford Motor Co and General Motors Co. In addition, it has also paired up with some tech firms such as Alphabet Inc.’s Waymo, nuTonomy and Drive.ai for testing the autonomous vehicles. It is possible that later on, these fleet owners and tech companies may use Lyft as their network provider.