Ride-hailing company Lyft is celebrating a milestone of sorts this week: It has now given 5,000 public rides in prototype self-driving vehicles operated by high-tech auto-industry supplier Aptiv PLC (NYSE: APTV).
Lyft was very late to join the self-driving technology rush, and its own research and development effort is still in early stages. But thanks to Aptiv and -- soon, perhaps -- other partners, some of Lyft's customers are getting a taste of the self-driving taxi experience.
A fleet of robot BMW taxis is operating in Vegas
This pilot program began earlier this year, when Aptiv deployed a fleet of 30 BMW sedans fitted with its prototype self-driving system in Las Vegas and made them available via Lyft's ride-hailing platform.
Lyft customers who use the company's app to hail a ride in Las Vegas are given a prompt asking if they agree to ride in a self-driving vehicle. If the rider's destination is on a route approved for the self-driving vehicles, then they may get picked up by one of Aptiv's self-driving BMWs. Riders in the self-driving vehicles are charged Lyft's usual fares.
These vehicles are prototypes, meaning that they're not empty when they arrive to pick up a rider: The cars have human drivers ready to take control if the self-driving system begins to go awry. But so far, they've been well-received by Lyft customers in Vegas. The average passenger rating for a self-driving Lyft ride is 4.96 out of a possible 5 stars, the company said, and 96% of the passengers say that they intend to ride in a self-driving Lyft again.
Who is Aptiv and how did it connect with Lyft?
Aptiv is the high-tech portion of former giant auto supplier Delphi Automotive, which split itself in two last year. The company has been working with Intel (NASDAQ:INTC) and Intel's machine-vision subsidiary Mobileye on a self-driving system that they hope to begin offering to automakers by the end of next year. In a parallel effort, the three have also been working with German automaker BMW AG (OTC:BAMXF) on a series of systems for vehicles that BMW is aiming to begin producing in 2021. (It's no coincidence that Aptiv's self-driving Lyft vehicles are BMWs.)
Delphi's self-driving effort got a big boost last October, when it acquired self-driving start-up nuTonomoy, a company formed by researchers from the Massachusetts Institute of Technology. A few months earlier, nuTonomy had signed a deal with Lyft to collaborate on a test of self-driving vehicles in Lyft service in Boston. (The nuTonomy team is part of Aptiv now.)
Why Lyft is looking to Aptiv (and others) for self-driving
Lyft's own self-driving technology program is thought to be far behind that of its larger rival, Uber Technologies -- and even farther behind the companies generally cited as the self-driving leaders, Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Waymo and General Motors' (NYSE:GM) Cruise.
Waymo has already begun deploying its own self-driving taxi fleet, and Cruise is expected to follow within months. But while it works to catch up with the technology, it has come up with a workaround: Last year, it opened up its ride-hailing platform to a number of companies developing autonomous-vehicle systems, including nuTonomy, Ford Motor Company, and Jaguar Land Rover, which took a small stake in Lyft.
What does it mean for investors interested in self-driving?
Self-driving vehicles have the potential to be a transformative technology, and the space has drawn tremendous interest from investors. But it's not easy to invest in "self-driving" right now. At the moment at least, there isn't really a "pure play" self-driving stock to buy. The closest thing we've seen so far was probably Mobileye -- but Intel acquired the company (at a hefty premium) early in 2017.
That has left investors searching for the next-best opportunities. If you're one of those investors, Aptiv probably deserves a closer look. Revenue and earnings have both grown solidly this year, and the company has so far shown a knack for bolting on acquisitions that help advance its technology.
And what of Lyft? If and when it goes public, Lyft is likely to show up on a lot of investors' take-a-closer-look lists. Much will depend on how well it stacks up against its more prominent rival, Uber, on many fronts -- including self-driving technology. But in its favor, Lyft has so far managed to put up good growth while avoiding the scandals that plagued Uber until last year. I suspect that it will have no trouble attracting interest -- and cash -- from investors.