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Don’t count on driverless cars to fix Lyft’s profitability struggles

Illustration of car emitting dollar signs
Illustration: Sarah Grillo/Axios

Lyft — and now its shareholders — are banking on robotaxis to replace high-priced drivers and help turn ride-hailing into a profitable enterprise. Don't count on it.

The big picture: Creating and deploying a robotaxi service is an expensive proposition — pegged by one AV company at $5 billion to $6 billion for the vehicle, the AV technology and the fleet operations and maintenance.

  • Even with partners to share the burden, those added costs would likely offset any savings from the elimination of human drivers, experts tell Axios.

What's happening: Lyft's initial public stock offering — likely to be followed by an Uber IPO within weeks — is a measure of investors' faith in the company's growth prospects.

  • Lyft's newly listed stock surged to nearly $89 after its $72 debut last Friday, but has plummeted since then.
  • Lyft's shareholder prospectus frequently touted its ambitious long-term AV aspirations — including a broad range of ride-hailing and transportation scenarios over the next 5–15 years.
  • It's hard to know if the stock's decline is tied to skepticism about AVs in particular or ride-hailing in general.

Details: Lyft said it has a two-pronged strategy to bring AVs to market. 

  • Its open platform lets AV developers use their vehicles to fulfill rides on Lyft's network, gaining insights into ride-hailing networks. In Las Vegas, for example, auto tech supplier Aptiv has deployed a fleet of automated BMWs (with a safety driver) on the Lyft network, providing 35,000 rides since January 2018.
  • Meanwhile, in Silicon Valley, Lyft is working with another big supplier, Magna, to jointly develop full self-driving technology. The team includes more than 300 engineers and robotics experts, a Lyft spokesperson says.
  • Magna can share their co-developed technologies with other customers, an arrangement Lyft says will accelerate the introduction of self-driving vehicles and "democratize" access to the technology.

Yes, but: Lyft already loses massive amounts of money — $911 million in 2018 — even though it's the epitome of an "asset light" business, with neither cars nor drivers on its books.

The bottom line: Perhaps Lyft is betting that more AVs on the road — from any automaker — will fuel growth in its ride-hailing network. But the company is not saying much so it will be up to investors — and customers — to decide.