When Lyft (NASDAQ: LYFT) launched Level 5 in 2017, it had grand plans for the autonomous vehicle (AV) division.
“This is too strategic an area for us not to be a player,” Luc Vincent, the Google executive tapped to lead Lyft’s efforts, said at the time. “We want to take an active role.”
Lyft’s decision to start Level 5 came shortly after competitor Uber (NYSE: UBER) launched its own autonomous driving project. In December 2020, Uber sold that money-losing division to Amazon-backed Aurora. As part of the equity deal, Uber agreed to invest $400 million in Aurora and take a 26% stake in the company.
Josh Kern, an analyst with Lux Research, told FreightWaves the Aurora sale/equity deal, allows Uber to “decouple from the self-driving business but still have a stake in it.”
“Today’s announcement launches Lyft into the next phase of an incredible journey to bring our mission to life,” Lyft co-founder and CEO Logan Green said in announcing the sale. “Lyft has spent nine years building a transportation network that is uniquely capable of scaling AVs. This partnership between Woven Planet and Lyft represents a major step forward for autonomous vehicle technology.”
On Tuesday, Green and the Lyft executives expanded on the sale of Level 5 and why it doesn’t mean Lyft is out of the autonomous driving business.
“This is strategically the right move at the right time,” Green said on the company’s Q1 2021 earnings call. “When we opened our Level 5 engineering center in 2017, the main goal was to make sure we’d have access to affordable and reliable autonomous technology. At that time, it wasn’t certain that there would be multiple well-funded autonomous vehicle programs. In just four years, we’ve built a world-class team and made remarkable progress developing a leading autonomous driving system.”
Green said Level 5 helped propel the self-driving industry forward, but technology development has sped up so fast that it makes more sense for Lyft to partner with companies that specialize in these areas, rather than building the technology itself.
“The market for AV technology has grown meaningfully since we first launched Level 5. This means we now don’t need to develop the technology ourselves to ensure we have access to a competitive market of providers and that we achieve our vision of integrating autonomous vehicles into our network,” he said.
Lyft is pivoting its focus to building a broader transportation network, something that John Zimmer, co-founder, president and vice chair, said is a priority for the company as it seeks profitability, perhaps as early as Q3 of this year.
“It is clear to us that the best way to commercialize AVs will be through an existing transportation network,” Zimmer said. “We are already leading the industry in terms of paid AV rides and partnerships. And with our focus on Lyft Autonomous, we are uniquely positioned to win the AV transition.”
Lyft Autonomous, led by General Manager Jody Kelman, will continue to focus on building the “self-driving consumer experience, marketplace and fleet services” future Lyft sees for itself and its customers.
Lyft has already conducted 100,000 paid AV rides since 2018, Green previously said. The company has been working with Motional, an Aptiv-Hyundai joint venture, on an AV project, and it expects to deploy fully autonomous Motional vehicles in several cities by 2023.
Zimmer said the company’s “hybrid network” will allow it to utilize AVs and other vehicles as needed to meet demands.
“Our hybrid network brings together the combination of human drivers and autonomous vehicles to unlock the highest utilization and always-available rides,” Zimmer said.
In response to an analyst question on the call, Zimmer expanded on the hybrid network concept.
“If others want to go and do it themselves without — without human drivers and autonomous vehicles — it’s near impossible, I’d say, to manage the demand curve,” he said. “Demand is not a static line. And so if you were to ask an AV-only operator, would you buy 100,000 vehicles that meet a noon peak demand or 1 million vehicles that meet a Saturday night peak demand, maybe they’d pick something in the middle? Then … their utilization would suffer and/or their prices would suffer. And so having that hybrid network is critical to operating in an AV environment.”
Green reiterated that Lyft is committed to utilizing autonomous vehicles and would leverage Lyft Autonomous to deploy them where it makes sense.
“Going forward, we are doubling down on our industry-leading Lyft Autonomous Platform, previously called Open Platform, to deploy and scale AVs with partners on our network,” Green said. “This team will continue to focus on the autonomous user experience, marketplace and fleet management services that ensure Lyft riders have access to the safest, most advanced autonomous technology on the market and that our AV partners have access to the full power of Lyft’s transportation network.”
Zimmer added, “Unlike competitors and highlighted by our Level 5 transaction, Lyft is aligned with our AV partners. We will not have significant ownership in a competing AV program and we are focused on being a trusted partner that can be relied on to improve their success.”