Collaborative venture: BMW and Mercedes join forces to market taxi mobile application, reaching a potential user base of 175 million
Lyft Expands into European Market with Acquisition of FreeNow
In a move to bolster its global presence, ride-hailing giant Lyft has acquired FreeNow, a mobility services joint venture founded by BMW and Mercedes in 2019. The deal, valued at approximately $200 million, allows Lyft to operate in 11 countries and almost 1,000 cities, significantly expanding its total addressable market.
The sale of FreeNow marks a strategic shift for BMW and Mercedes, who are focusing on their core automotive businesses and electrification efforts. For Lyft, acquiring FreeNow offers more than just market expansion. It provides an opportunity to leverage localized knowledge and existing relationships with fleet owners, taxi drivers, and regulators, enabling a smoother expansion compared to competitors like Uber, who previously entered Europe with aggressive and often contentious approaches.
Benefits for Lyft
Lyft expects to reap several benefits from the acquisition. These include:
- Increasing its addressable market to over 300 billion private vehicle trips annually.
- Combining strengths of both companies to enhance customer experiences.
- Avoiding regulatory and operational friction by respecting FreeNow’s local market adaptations and management.
- Accelerating revenue growth, as reflected by a 14% year-over-year ride volume increase and a forecasted 13–17% growth in gross bookings.
Partnerships and Collaborations
Lyft is also partnering with Baidu to deploy autonomous vehicles in Europe, which could further differentiate its offerings and improve sustainability in line with European green mobility goals. The collaboration between Lyft and FreeNow aims to combine strengths, learn from each other, and scale what works best.
Competition with Uber
Lyft’s acquisition provides a strategic alternative to Uber’s previous global expansion style. Lyft’s focus on integration, localized market respect, and technological partnerships may allow it to compete more sustainably and effectively in Europe’s complex regulatory environment, offering a complementary and possibly more palatable option for European users and regulators.
The acquisition was facilitated by investment bank Lazard, who acted as advisors for Mercedes and BMW, and Guggenheim Securities, who worked with Lyft during the deal. FreeNow operates in major European cities like Berlin, London, Hamburg, and Barcelona.
With this strategic move, Lyft is poised to make a significant impact in the European market, leveraging the strengths of FreeNow to improve its customer experience, expand its market, and compete effectively in a complex regulatory environment.
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- Lyft's acquisition of FreeNow not only expands its market presence but also opens up opportunities for technology collaboration, as evidenced by the partnership with Baidu for deployment of autonomous vehicles in Europe.
- By acquiring FreeNow, Lyft is able to invest in localized knowledge and relationships, which could provide a competitive edge in Europe, offering a more sustainable and effective approach compared to competitors like Uber.
