Please ensure Javascript is enabled for purposes of website accessibility

Why Lyft and nuTonomy Joined Forces on Self-Driving Taxis

By John Rosevear - Updated Jun 6, 2017 at 5:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Lyft and nuTonomy, a Massachusetts-based self-driving start-up, said they will run a pilot program of self-driving Lyft cars in Boston. Here's what we know.

Ride-hailing provider Lyft has another new self-driving partner: nuTonomy. The two companies announced on June 6 that they will collaborate on a test of self-driving vehicles in Lyft service in Boston.

Here's what we know. 

What is nuTonomy?

NuTonomy is a Massachusetts-based start-up that is developing software for autonomous vehicles. The company, created in 2013, is a spinoff of research from the Massachusetts Institute of Technology. It has been running a pilot of its own autonomous-vehicle taxi service in Singapore since August 2016.

NuTonomy began testing vehicles equipped with its software in certain neighborhoods in Boston earlier this year. 

A white Renault Zoe with nuTonomy logos in front of the Old State House in downtown Boston, Massachusetts.

NuTonomy is currently using Renault Zoe electric cars to test its prototype self-driving system in Boston. Some of those cars will be put into Lyft service as part of an upcoming test. Image source: nuTonomy.

What's this test about?

It's about learning. In a joint statement, the companies characterized it as "a strategic R&D partnership focused on understanding and optimizing the end-to-end experience of autonomous vehicle passengers."

What's that mean? Here's more from the statement: 

"Under the partnership, nuTonomy and Lyft will align their respective technology platforms to gather valuable research and insights into all aspects of ensuring a passenger's comfort and safety during an AV ride -- from routing and booking to the performance of the driving system and how it interacts and communicates with the rider."

The companies said that the effort will take place in Boston. NuTonomy's headquarters is in nearby Cambridge, Massachusetts. 

Isn't Lyft already working on self-driving technology?

Unlike its larger rival Uber Technologies, Lyft doesn't have a full-blown autonomous-vehicle research-and-development program of its own. But it does have two partners aside from nuTonomy that both have advanced self-driving projects: Detroit auto giant General Motors (GM -2.88%), and Alphabet (GOOG -0.71%) (GOOGL -0.77%) subsidiary Waymo, the company formerly known as the Google Self-Driving Car Project. 

GM took a 9% stake in Lyft early last year. Both have strongly hinted that a multicity test of prototype self-driving Chevrolet Bolt electric vehicles in Lyft service will begin in the near future (possibly early next year). The Bolt was designed to incorporate self-driving technology as it is developed. 

And in May, Lyft and Waymo announced that they would work together on "new self-driving products," though no details have yet been released.

Why does Lyft want yet another self-driving partnership?

Like Uber, Lyft knows that ride-hailing businesses will ultimately need self-driving vehicles to be sustainably profitable. (Both Uber and Lyft are believed to be losing money now.) Without a robust autonomous-vehicle-tech program of its own, Lyft will need a partner with a strong self-driving technology offering. 

Given that, it makes sense that Lyft would want to kick the virtual tires of as many potential partners as possible. 

What does nuTonomy get out of this deal? 

Here's what nuTonomy CEO Karl Iagnemma said in that June 6 statement: "By combining forces with Lyft in the U.S., we'll be positioned to build the best passenger experience for self-driving cars. Both companies care immensely about solving urban transportation issues and the future of our cities, and we look forward to working with Lyft as we continue to improve our autonomous vehicle software system."

Does nuTonomy build cars?

NuTonomy doesn't build its own vehicles (and has no plans to begin). It's focused on developing a software "brain" for autonomous-vehicle fleets. The company has used a few different brands of vehicles in its testing and pilot programs. 

Automotive News reported that Iagnemma said that the pilot program with Lyft will use electric sedans like the one in the photo above, made by French automaker Renault SA (RNSDF -17.39%).

Green, Ammann, and Zimmer with two Chevrolet Volt plug-in hybrid sedans.

Lyft co-founders Logan Green (left) and John Zimmer (right) with GM president Dan Ammann (center). GM owns a 9% stake in Lyft and Ammann is a member of the company's board of directors. Image source: General Motors.

How will the nuTonomy deal affect Lyft's relationship with GM?

It probably won't affect it at all. GM's deal with Lyft isn't exclusive, and Lyft CEO Logan Green has made it clear that Lyft's various partnerships don't directly overlap. 

GM president Dan Ammann is a member of Lyft's board of directors. It's probably safe to assume that GM knew about the deal in advance. It's also safe to assume that if GM objected to a deal like this, Lyft would hear it and take it seriously.

What's next for Lyft and nuTonomy?

The companies didn't give a timeline for their planned testing in Boston. But they did characterize the upcoming Boston test as the "initial phase" of their partnership, and said that a broader partnership (perhaps in more U.S. cities) will be considered in time. 

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Rosevear owns shares of General Motors. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
$116.40 (-0.77%) $0.90
General Motors Company Stock Quote
General Motors Company
$36.48 (-2.88%) $-1.08
Renault SA Stock Quote
Renault SA
$22.90 (-17.39%) $-4.82
Alphabet Inc. Stock Quote
Alphabet Inc.
$117.30 (-0.71%) $0.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.