G.M. Invests $500M in Lyft • Hacker News Board

Re: G.M. Invests $500M in Lyft

#101

Post by whistlecrackers » Mon, Jan 04, 2016, 5:00 PM UTC

kbenson wrote: post #88

jegutman wrote: post #85

Earlier quoted context omitted.

This might be a bit technical, but the company that received a bailout went through bankruptcy and re-structuring. https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor... So they didn't get a bailout that they are now using to "wildly speculate on tech startups" because all that capital has been restructured. Many companies did get bailed out in a market where raising capital was near impossible and as a resu…

> I'm guessing your particular objection here is that they're a non-financial company and it doesn't seem to be part of their core business? Although I'm pretty sure every major automaker is also a financial company, and has been for quite a while. All those special 0% down or cash back deals don't come from the dealer.

You get it. Some times the automotive side takes a backseat to the financing.

Re: G.M. Invests $500M in Lyft

#102

Post by aaardvark » Mon, Jan 04, 2016, 5:02 PM UTC

adevine wrote: post #96

kbenson wrote: post #88

Earlier quoted context omitted.

> I'm guessing your particular objection here is that they're a non-financial company and it doesn't seem to be part of their core business? Although I'm pretty sure every major automaker is also a financial company, and has been for quite a while. All those special 0% down or cash back deals don't come from the dealer.

GM's financial arm was GMAC, which, while bailed out during the financial crises, eventually rebranded and IPO'ed as Ally Financial. The US Treasury made a ~ $2.4 billion profit on a $17.2 billion investment: https://www.treasury.gov/press-center/press-releases/Pages/j...

On a risk-adjusted basis, that's a pretty mediocre return.

Re: G.M. Invests $500M in Lyft

#103

Post by pratyushag » Mon, Jan 04, 2016, 5:05 PM UTC

pbnjay wrote: post #9

So Google+Ford, Lyft+GM, Tesla on both sides software/hardware... Where is Uber's Hardware going to come from now? I wonder if this is an instance where the personalities involved with Uber are having a detrimental effect on these sorts of long-term needs. Or is there something yet to be announced?

Tata (a large automobile company based in India with cars globally) invested $100m in Uber. I imagine there will be more from other companies.

Re: G.M. Invests $500M in Lyft

#104

Post by bendykstra » Mon, Jan 04, 2016, 5:06 PM UTC

tinkerrr wrote: post #86

tbrock wrote: post #80

I'm glad we bailed them out so they could wildly speculate on tech startups.

So you're saying a stagnant company in a stagnant industry that almost died should remain stagnant and not try anything risky at all? It's not wild speculation for GM. They most likely have ways to work together. It's unlikely a completely passive investment.

GM has good reason to make risky decisions, since the taxpayers will likely be asked to support the company a second time if it runs into trouble. As a taxpayer, I would like them to be as safe and stagnant as possible, but I have no say in the matter. This is the moral hazard created by the bailout.

Re: G.M. Invests $500M in Lyft

#105

Post by coliveira » Mon, Jan 04, 2016, 5:07 PM UTC

tonyedgecombe wrote: post #98

j0e1 wrote: post #41

“From a G.M. perspective, we view this as much more of an opportunity than a threat” - G.M President Something you don't hear big corps talk so about start-ups very often. It's promising.

I can't see the opportunity for them, on the other hand I can see the threat, if autonomous cars become ubiquitous then why would you bother owning your own? Also if rental becomes the dominant model then customers aren't going to worry so much about those expensive extras where car manufacturers make their profits.

Even if all cars are self driving, these cars have to come from somewhere. The rental model may in the end provide more profits, because it has built-in repeated charges.

Re: G.M. Invests $500M in Lyft

#106

Post by kbenson » Mon, Jan 04, 2016, 5:08 PM UTC

adevine wrote: post #96

kbenson wrote: post #88

Earlier quoted context omitted.

> I'm guessing your particular objection here is that they're a non-financial company and it doesn't seem to be part of their core business? Although I'm pretty sure every major automaker is also a financial company, and has been for quite a while. All those special 0% down or cash back deals don't come from the dealer.

GM's financial arm was GMAC, which, while bailed out during the financial crises, eventually rebranded and IPO'ed as Ally Financial. The US Treasury made a ~ $2.4 billion profit on a $17.2 billion investment: https://www.treasury.gov/press-center/press-releases/Pages/j...

Sure (I was aware of most of that in general, but not the specifics), which only slightly alters my point, which is that major automakers have lots of experience in finance at certain levels. GM may have sold off a large portion of the division that handled this for them, but I would be surprised if there's not still a lot of people with quite a of of experience in finance embedded somewhere in their org.

My real objection is to thinking of automakers as not having finance as core to their business. The vast majority of new car purchases are financed in some manner[1], and many of those are through the financial divisions of the automakers[2]. To my eyes, finance incentives are core to their marketing, and marketing is core to their business.

1: http://www.consumerreports.org/cro/news/2013/09/car-financin...

2: http://www.reuters.com/article/us-autos-financing-insight-id...

Re: G.M. Invests $500M in Lyft

#107

Post by stanmancan » Mon, Jan 04, 2016, 5:09 PM UTC

samstave wrote: post #81

Shivetya wrote: post #56

Earlier quoted context omitted.

One area I haven't seen mentioned is the loss of human interaction. For many just having someone to talk to/at during the trip is needed.

Here's where it will be a showstopper for me; many many times the uber map has fucked up directions and so I tell the driver the route I want to take, or to pass a particularly slow driver in front, in addition I sometimes change my destination/add a stop. How easily can I do any of this with a robot car?

Have a big touch screen in the car that shows the destination and the route the car is going to take? And allow you to drag/drop to alter the route similar to Google Maps?

Re: G.M. Invests $500M in Lyft

#108

Post by MajorLOL » Mon, Jan 04, 2016, 5:09 PM UTC

adevine wrote: post #96

kbenson wrote: post #88

Earlier quoted context omitted.

> I'm guessing your particular objection here is that they're a non-financial company and it doesn't seem to be part of their core business? Although I'm pretty sure every major automaker is also a financial company, and has been for quite a while. All those special 0% down or cash back deals don't come from the dealer.

GM's financial arm was GMAC, which, while bailed out during the financial crises, eventually rebranded and IPO'ed as Ally Financial. The US Treasury made a ~ $2.4 billion profit on a $17.2 billion investment: https://www.treasury.gov/press-center/press-releases/Pages/j...

>The US Treasury made a ~ $2.4 billion profit on a $17.2 billion investment

Factor in the interest USA would have saved by paying down the national debt instead. Additionally, consider what private investors would have returned with the same investment and what they would have paid in tax on personal income if they had never been taxed that $17.2b instead.

They won on this one, we can point at the various Solyndras the USA has bet on and lost while we are at it. This ignores the fact that we don't mail taxes in for government to act like a massive VC. We send the cash in so they can fix the 'crumbling roads and bridges', service debt and help the poor we are always hearing about.

Re: G.M. Invests $500M in Lyft

#109

Post by tomasien » Mon, Jan 04, 2016, 5:09 PM UTC

tbrock wrote: post #80

I'm glad we bailed them out so they could wildly speculate on tech startups.

The bailout was massively profitable for the government and every penny has been repaid. Investing in innovation is exactly what a company like GM should be doing and our tax dollars are in no way involved in this.

Edit: didn't make money on GM http://www.reuters.com/article/us-autos-gm-treasury-idUSBREA... Made lots of money overall: http://www.nytimes.com/2014/12/20/business/us-signals-end-of...

Re: G.M. Invests $500M in Lyft

#110

Post by evgen » Mon, Jan 04, 2016, 5:10 PM UTC

sixQuarks wrote: post #60

I think GM is wasting their money. The talented engineers in this space are flocking to Tesla, Google and soon-to-be Apple.

Given that those talented engineers were not trained de novo by any of those companies it is a fair bet that they joined for a potential upside and could be bought by Lyft+GM under the right circumstances. There were people willing to actually go work for Uber in this space so, obviously, anything is possible...