Daimler AG and BMW AG are pouring more than 1 billion euros ($1.13 billion) into their joint car-sharing and ride-hailing businesses to take on the likes of Uber Technologies Inc. and Lyft Inc.
The German venture, which is estimated to become the world’s largest car-sharing operator, will weigh purchases of startups or established players, along with collaborations, Daimler said. The investment will create up to 1,000 jobs across five units including electric vehicle charging and parking services, initially focused on the European market.
The timing is striking given Uber and Lyft are both preparing to list shares on the market. Uber, about three times as large as the Daimler-BMW operations by revenue, has drawn valuation estimates as high as $120 billion.
The carmakers are betting their unified platform will resonate with investors, Daimler Chief Executive Officer Dieter Zetsche said in a Bloomberg Television interview. “For now,” the carmakers have no plans for a share sale of the division, Zetsche told reporters at a press conference.
The new venture, announced almost one year ago, will combine Daimler’s Car2go and BMW’s DriveNow to create the world’s biggest car-sharing operator by users, according to BloombergNEF. It also includes Daimler’s MyTaxi, Europe’s largest ride-hailing app. The companies set up their respective car-sharing businesses years ago but have struggled to turn a profit.
“The five services will melt together more and more into a mobility offering with fully electric and self-driving fleets,” BMW CEO Harald Krueger said. “This will be a central pillar of our strategy as a mobility provider.”
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Keeping up with technology competitors such as Uber is critical for carmakers as new modes of on-demand transport proliferate to undermine private car ownership. In Berlin, technology platform Trafi has started cooperating with municipal transport provider BVG to integrate services across public and private sectors in one app. The service is similar to Daimler’s moovel app.
Together, BMW and Daimler’s combined services have revenue of 3 billion euros, Daimler Chief Financial Officer Bodo Uebber said. (By comparison, Uber reported revenue of $11.4 billion in 2018.) The ventures operate globally but are focused on Europe, where they have the biggest advantage he said.
“We are not the biggest in some countries, but nobody has all these parts in one company,” Zetsche said.
New branding and names will be introduced in coming months. MyTaxi, for example, will be folded into the FreeNow brand, according to a statement Friday.
BMW and Daimler are pushing to grow their mobility unit comes as both Uber and Lyft confidentially filed for initial public offerings late last year. Uber’s offering could be the largest IPO in 2019 and one the five biggest of all time if the U.S. company reaches the valuations bankers have forecast.
— Oliver Sachgau and Christoph Rauwald (Bloomberg)