Confetti falls as Lyft CEO Logan Green (C) and President John Zimmer (LEFT C) ring the Nasdaq opening bell celebrating the company’s initial public offering (IPO) on March 29, 2019 in Los Angeles, California. The ride hailing app company’s shares were initially priced at $72.
Mario Tama / Getty Images
DETROIT — In 2016, Lyft co-founder John Zimmer predicted most of the company’s rides would be self-driving within five years, a transformation that would largely eliminate the need for costly drivers.
Today, the ride-hailing company is still nowhere near that milestone, and Zimmer, Lyft’s president, isn’t saying when he thinks it might come to pass. But he still believes self-driving vehicles remain a critical part of Lyft’s future.
“I really think in the next two to three years that kind of actual no driver, driverless vehicle will be something you can order pretty easily on the Lyft platform,” he told CNBC last week in Detroit.
Zimmer, acknowledging that he already got it wrong once, declined to speculate on when a majority of Lyft rides would be offered without a driver.
Along with companies including Uber, Tesla and General Motors, Lyft has come to realize that taking the driver out of driving could take years, if not decades.
Since its initial public offering in March 2019, Lyft has sold its internal autonomous vehicle development to a subsidiary of Toyota Motor and has only recently started offering self-driving rides in three U.S. cities with autonomous vehicles made by its partners. And even those vehicles still include backup safety drivers.
Zimmer, 38, said autonomous vehicles, or AVs, will be used in tandem with traditional drivers for the foreseeable future, which is why he is convinced the company is well positioned to grow in both areas.
“I’m extremely confident that autonomous vehicles will roll out on existing ride-share or transportation networks,” he said. “I think we will be quite important to the AV transition.”
A “hybrid network” allows the company to better match supply with the peaks and valleys of demand throughout a day or week, according to Zimmer. He argues a fleet only filled with self-driving vehicles will almost always be either under-supplied or over-supplied, leading to high costs and low utilization.
That cautionary tone marks a shift from six years ago, when Zimmer sent waves across Wall Street and the automotive industry with his prediction that self-driving cars would soon dominate the industry. Some believed at the time the ride-hailing company and others like it — namely, Uber — could eventually eliminate the need for car ownership.
“Every year, more and more people are concluding that it is simpler and more affordable to live without a car,” Zimmer wrote in a Medium post in September 2016. “And when networked autonomous vehicles come onto the scene, below the cost of car ownership, most city-dwellers will stop using a personal car altogether.”
A transition is happening, but at a lot slower pace than many have predicted.
Companies such as GM majority-owned subsidiary Cruise and Alphabet’s Waymo have begun offering completely driverless rides in select cities. Other companies such as Amazon’s Zoox and Argo AI, which is backed by Ford Motor and Volkswagen, are making advancements in their research and testing fleets as well.
Lyft this year started offering self-driving vehicles on its ride-hailing app from partners Motional in Las Vegas, and Argo in Miami and Austin, Texas.
“Creating a car that sees better than humans and reacts better than humans is very difficult. And so it’s just taking more time, but I don’t have doubts that it will happen,” Zimmer said.
Partnerships are key to Lyft’s plans to deploy more self-driving vehicles, according to Zimmer. They can eliminate the need to own the pricey vehicles and potentially lower liability risks in the event of an accident.
On the Lyft side of the equation are nearly 20 million active users and billions of dollars invested in fleet management, pricing algorithms and other back-end services, Zimmer said.
In the second quarter, Lyft began generating revenues from licensing and data-access agreements, primarily with third-party autonomous vehicle companies.
Still, the hype on Wall Street has faded for ride-hailing companies. Lyft’s stock is down by more than 80% since its IPO in March 2019, including a roughly 70% decline year to date. Its largest rival, Uber, is down by about 33% this year and since it went public in May 2019.
Rumors circulated earlier this year that Lyft could become an acquisition target, but Zimmer said it is committed to being “an independent company and to execute and build an extremely large and impactful business.”
– CNBC’s Michael Bloom contributed to this report.