Ed Wallace

Buy me a Lyft

Wallace
Wallace

It was almost impossible for my brain to comprehend the story I was reading. Actually, two stories: One told that General Motors had decided to invest $500 million in the Internet taxi company, Lyft; the other related how this week’s Powerball lottery had hit $1.5 billion based on presold tickets.

I couldn’t decide which investment was the bigger waste of money.

Then again, just over 20 years ago GM sank over $1 billion into creating its first electric car, the EV-1, which went on to lease fewer than 500 copies. Ok, maybe GM is getting smarter. After all, this is half that investment — and it’s possible that twice as many vehicles could be sold.

In the stories that flew around the media, GM claimed that for that half billion expense, Lyft would have access to GM’s research on self-driving cars. Additionally, GM claimed that it would become a preferred vendor to Lyft and allow the company’s drivers to lease GM products — even for very, very short terms. Finally, GM asserted, this would let it better understand how “car sharing,” which is just an unregulated taxi service, functions.

If my blood pressure climbed on the first two claims of “benefits” GM would get for its half billion, I reached for my blood pressure meds on the last one.

GM, here’s some information you can have for free, since ultra-simple technology seems to be tough for you. Using an Uber or Lyft app on one’s cell phone or iPad simply sends binary numbers to said Internet taxi company’s servers. Think of those binary numbers as replacing the dialing of phone number for a cab. Because of GPS positioning or cell-phone tower locations, the server knows where the customer is; using their mapping software, they then send your request to the person driving one of their cabs closest by. And then they bill you electronically. That’s the same as having a credit card on file.

If you are still confused, please go down to the OnStar center in your Detroit headquarters. Any of the lovely individuals working there will be glad to let you know how this works. In fact, just look up on the wall at OnStar and you’ll see this huge map of the entire United States covered by little lights signifying every GM car on the road that has its OnStar working. The little red lights on that map show every OnStar-equipped car in an accident. I saw it when I toured the OnStar operations a decade ago.

OK, that should save GM around $250,000,000 on their investment in Lyft. The next step is that “preferred vendor for vehicle sales.” This is the exciting part that someone at GM missed: It doesn’t cost anything to become a preferred vendor to a company or to its employees. That’s right, if GM comes out with a self-driving car, the kind that one day soon Uber and Lyft will buy to replace all of their drivers … oops. I should have written “spoiler alert” for everyone already driving for these companies; sorry. But if it does, these companies can simply talk to one of the commercial salespeople at GM dealerships and buy them to their hearts’ content. That’s right GM, car makers don’t pay cab companies to buy their taxis. That should save another $150,000 million on that investment.

And finally, you don’t have to pay one penny to allow a certain company’s employees to lease or buy your vehicles either. -At least, not outside of normal rebates and incentives. Again, maybe the GM executives that did this deal don’t know that. But spend five or six minutes with any of your thousands of new car dealers and they’ll be glad to show you how car sales really work. Or ask a major vendor such as Frito Lay, because that is one of thousands of companies whose employees get special pricing on new vehicle purchases with Detroit automakers.

Other than that, if that half billion was just burning a hole in your pocket, you should have played the Powerball. Because either you were going to double the money quickly after you purchased 500 million tickets, or you’d lose it quick. Either gamble works out the same.

© Ed Wallace 2015

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. E-mail: wheels570@sbcglobal.net.

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