The partnership between ride-sharing company Lyft Inc (NYSE: LYFT) and Google-affiliated, self-driving car technology company Waymo is just one initiative in Lyft’s strategy to stake a claim in the emerging market for on-demand consumer transportation services, company officials said on May 7.
Lyft confirmed Waymo’s announcement that Waymo will use Lyft’s platform to deploy 10 self-driving vehicles in Phoenix starting sometime in the second quarter. Passengers will be able to book a ride with the Lyft app, and if a Waymo vehicle is nearby, the passenger will have an option to choose that vehicle.
Lyft’s partnership is one element in its two-pronged approach towards autonomous vehicles, according to Lyft co-founder and president Jeff Zimmer.
The first approach, which Lyft calls Level 5, is using an in-house team to use the company’s data to develop components that will complement self-driving, such as mapping better estimated arrival times. The other is working with third-party companies, such as Waymo, Zimmer said.
“You can expect more developments on both sides of that two-pronged strategy,” he said.
The partnership also complements Lyft’s other initiatives for bike-sharing and scooter-sharing, on top of its existing ride-sharing service, chief financial officer Brian Roberts said. He pointed to a U.S. consumer transportation market estimated at $1.2 trillion, with $1 trillion of that spent on car ownership.
“We see this once-in-a-generation opportunity to move this trillion dollar-plus car ownership market to the world of transportation-as-a-service [TaaS],” Roberts said.
Despite reporting widening net losses for the first quarter of 2019, Lyft executives were confident that the company could start seeing profits next year. One factor is emerging demand for TaaS, and the other is a maturing ridesharing market.
“If you look at the economics, you can see as a percent of revenue that this is the most rational the market has been. I think that’s a really important takeaway,” Zimmer said.
“There are two strong layers now, right? And both can provide three-minute ETAs [estimated time of arrival], three-minute pickup times in major markets. And so then the reason why people choose one company versus the other comes down to brand,” he said.
In terms of financial performance, Roberts pointed to factors such as an improving margin for earnings before interest, taxes, depreciation and amortization (EBITDA), which was a non-GAAP measurement for Lyft. GAAP stands for generally accepted accounting principles.
The adjusted EBITDA margin in the first quarter of 2019 was 28 percent, compared with 60 percent in the first quarter of 2018. The change between the two percentages from a higher percentage to a lower percentage reflects Lyft’s improving profitability, Roberts said.
Lyft is also seeking to reduce its insurance costs, which will eventually increase the return on investment, Roberts said. Lyft’s new driver-centered programs include vehicle maintenance, plus longer-term investments in telematics for driver behavior and predictive analysis for fraudulent claims.
Image sourced from Pixabay
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