Magna International Inc said on Thursday it will supply Lyft Inc with high-tech kits to turn vehicles into self-driving cars, but will not manufacture autos for the ride-hailing service
Magna shares were up 6.5 percent at C$73.48 in midday trade in Toronto as executives described the auto supplier’s role in a new autonomous venture with Lyft. The Canadian auto-parts supplier said late on Wednesday it would invest $200 million in Lyft and work with the firm to co-develop self-driving cars.
“As we work with Lyft, hopefully that brings for us an opportunity to potentially do more with Lyft as well as others in this area,” Magna Chief Financial Officer Vince Galifi told analysts on a conference call on Thursday.
The jointly developed self-driving system is expected to be on some of Lyft’s fleet in the next few years, Magna spokeswoman Tracy Fuerst said by email.
The auto industry is looking for ways to profit from the rise of car-sharing services like Lyft and bigger rival Uber Technologies Inc, which are expected to reduce vehicle sales and chip away at future profits.
Goldman Sachs has predicted that the ride-hailing market will grow eightfold by 2030 to five times the current taxi market
Several automakers, however, do not expect self-driving vehicles to be in production before 2021.
Lyft and Magna will jointly own intellectual property developed through the new venture and Magna will be Lyft’s exclusive supplier of self-driving car kits, Magna Chief Technology Officer Swamy Kotagiri said.
Those kits – which are used to convert ordinary automobiles into self-driving cars – include cameras, radar and lidar systems that use light pulses to gauge a vehicle’s position on and near the road. The kits could also be sold to other parties besides Lyft, Kotagiri said.
Revenue from the deal is not expected to be material in the short term for Magna, Galifi said.
Over the longer-term, “the potential for revenues across the entire industry is significant,” he added.
Galifi said the Lyft investment was already incorporated into the company’s 2018-2020 outlook.
(Reporting By Allison Lampert in Montreal; Editing by Marguerita Choy and Suzannah Gonzales)