You are here

General Motors salvages ride-hailing company Sidecar for parts

Tuesday, January 19, 2016 - 11:50
GM.jpg
General Motors Co is following up its US$500 million bet on Lyft Inc. with another flashy, though far less costly, move to fortify itself against the rise of Uber Technologies Inc.

[SAN FRANCISCO] General Motors Co is following up its US$500 million bet on Lyft Inc. with another flashy, though far less costly, move to fortify itself against the rise of Uber Technologies Inc.

The automaker has acquired the technology and most of the assets of the San Francisco-based ride-hailing pioneer Sidecar Technologies Inc. GM is also bringing on board around 20 employees from the Sidecar team, including co-founder and chief technology officer Jahan Khanna. Co-founder and chief executive officer Sunil Paul is not joining GM.

The price of the transaction was not disclosed, although a person familiar with the matter said it was less than the roughly US$39 million that Sidecar raised in its failing effort to compete with much better-financed rivals like Uber and Lyft. David Roman, a GM spokesman, said the assets and employees would support the Lyft alliance and other efforts at the automaker.

The deal is another sign that automakers are waking up to the threat Uber poses to the traditional auto industry. On Jan 4, GM announced it had invested US$500 million in Lyft as part of a US$1 billion round that valued the company at US$5.5 billion. Daniel Ammann, GM's president, joined Lyft's board as part of the deal.

Ford Motor Co CEO Mark Fields has said his company is working on its own ride-sharing service. In 2014, Daimler AG acquired German ridesharing apps RideScout and mytaxi.

Sidecar helped introduce the concept of peer-to-peer car- sharing when it launched in 2012 and essentially allowed anyone who passed a background check to offer rides to smartphone- toting passengers. At the time, Uber was brokering rides only between users of its mobile app and licensed limousine drivers. Lyft entered the scene soon after and the following year, Uber launched its own ride-sharing service, UberX.

Sidecar's inability to compete in the arena it helped create demonstrates the market power and tenaciousness of Uber, which subsequently raised more than US$10 billion in financing and has offered generous monetary incentives for any driver that switched from a competing ride-sharing platform. It was most recently valued at US$62.5 billion, making it the world's most valuable startup.

In early 2015, Sidecar shifted its focus to handling deliveries for other businesses, including Yelp Inc's food- delivery service Eat24. But by Dec 29, Sidecar was finished: Mr Paul wrote in a blog post on Medium that the company would shut down.

"We are the innovation leader in ridesharing despite a significant capital disadvantage, continually rolling out new products that set the bar for others to follow," Mr Paul wrote. "This is the end of the road for the Sidecar ride and delivery service, but it's by no means the end of the journey for the company."

GM is preparing to introduce its own set of transportation services, which it has dubbed Maven, the source familiar with the matter said. The initiative may allow owners of GM vehicles to give rides to other passengers who are commuting in the same direction. GM President Ammann will take charge charge of Maven, this person said.

GM filed to trademark the Maven name on Nov 25, 2015. The application, filed with the United States Patent and Trademark Office, described "Application software for connecting vehicle drivers and passengers and for coordinating transportation services; software for use in planning, monitoring and controlling urban transportation." The person familiar with the deal added that as part of the transaction, GM will also get a license to a patent that was granted to Sidecar CEO Paul in 2002: "System and method for determining an efficient transportation route." Sidecar executives believed the patent covered the essential intellectual property behind ride-sharing, though Uber and Lyft never responded to Sidecar's repeated attempts to enforce the patent, this person said.

BLOOMBERG