Volkswagen’s $300 million investment in ride hailing service Gett is not exactly earth shattering news these days for the automotive industry. But what did catch our eye was what Volkswagen said,
Ride-hailing will be at the center of our new ‘mobility on-demand’ business, which we are building as the second pillar alongside the classic automobile business.
“Second pillar.” Let that sink in a second. The first pillar, we assume, is the design, manufacture and sale of vehicles of every kind. But that second pillar is a service industry. For now that service includes people driving cars. What happens when we no longer need the drivers because the cars are autonomous?
Of course, Gett drivers will have the opportunity to buy Volkswagens at “attractive terms” – all the better to put more Volkswagens on the road. And, of course, this is not the first relationship of its kind. GM and Lyft already have a partnership going on. Uber is leasing Toyotas to drivers.
With autonomous vehicles coming, with every OEM partnering with a ride hailing/sharing company, and in a world where Uber attracts $3.5 billion (with a “B”) investment from the Saudi Public Investment Fund, it might be worth asking whether some day we will not go to the “Toyota” dealer to buy a car, but, instead, to the Uber dealer – presuming we buy a car at all. In just a few years, Uber has obtained a valuation that may exceed GM and many others. Based on all that information, maybe Volkswagen should refer to its new service industry venture as the “First pillar.”
© 2016 Foley & Lardner LLP