Ride-sharing service Lyft and General Motors are launching a program that will allow current Lyft drivers to rent GM cars, the companies said today.
The pilot program, which starts this month in Chicago and is called Express Drive, will offer GM vehicles to Lyft drivers for $99 a week for up to eight weeks. The $99 will be waived to Lyft drivers who log 65 or more rides per week. GM and Lyft will cover the cost of insurance and maintenance.
The program is expected to come to Baltimore, Washington and Boston later this year, a Lyft spokeswoman said.
Initially the vehicles will be Chevrolet Equinox crossovers equipped with OnStar, GM's connectivity system.
This is the first step taken by the two partners since GM announced in January it is investing $500 million in Lyft. They have formed a strategic alliance that eventually will offer rides through a network of autonomous vehicles.
"Launching Express Drive is another way we treat drivers better, in addition to Power Driver Bonus, tips and same day payouts," said John Zimmer, Lyft president and co-founder, in a statement. "We're making sure everyone who wants to be a Lyft driver can be, by providing ultimate flexibility at incredible rates."
Zimmer and co-founder Logan Green started the ride-sharing service in 2012. It is the second-largest such service in the U.S. after Uber and is available in more than 200 U.S. cities. Uber operates in twice as many U.S. cities and dozens of countries.
"These drivers can lower their costs by providing customer service to a large number of passengers," said Karl Brauer, industry analyst with Kelley Blue Book. "Assuming the financial structure pans out for GM and Lyft drivers it's basically a win-win-win ride-sharing system."
Kelley Blue Book is owned by Cox Automotive, which also owns a business called FlexDrive, which a similar rental car program to Uber.
Whether the financial model of ride-sharing is viable remains debatable. Both Uber and Lyft are privately held, which means they don't report financial results.
Both Uber and Lyft are based on similar business models. Neither company owns cars and both claim that the drivers are independent contractors, although that has been challenged in court in several states.
Aswath Damordaran, a finance professor at New York University's Stern School of Business, uses data that have leaked from various sources to estimate that Lyft more than doubled its gross bookings last year to about $1.2 billion, and will more than double that to $2.7 billion this year.
However, Damordaran estimates Lyft lost $50 million in 2014, while Uber lost $470 million.