Volkswagen AG makes strategic investment of $300 mn in ride-hailing service Gett

Volkswagen AG had made a ''strategic investment'' of $300 million in ride-hailing service Gett, the German automaker announced yesterday. The Israeli startup which operates across more than 60 cities globally, had earlier raised $220 million in funding.

''Innovative, digitally integrated services covering all aspects of mobility promise very strong growth momentum and huge earnings opportunities in the coming years. The ride-hailing market represents the greatest market potential in on-demand mobility, while creating the technological platform for developing tomorrow's mobility business models. The Volkswagen Group's expressed goal is to generate a substantial share of sales revenue from such new business models by 2025,'' the company said in a statement.

Volkswagen chairman Matthias Müller said, ''Within the framework of our future Strategy 2025, the partnership with Gett marks the first milestone for the Volkswagen Group on the road to providing integrated mobility solutions that spotlight our customers and their mobility needs.''

The deal would see Volkswagen offer on-demand ride services to its business customers while Gett drivers would get discounts on the use of Volkswagen cars as taxis, according to the Financial Times.

According to commentators, car makers were responding to two challenges in their business environment. While, tech outfits like Alphabet's Google Self-Driving Car Project and Uber were developing autonomous technologies, car companies had to choose between collaboration or competition. Fiat Chrysler seemed to have opted for the former when it decided to collaborate with Google on self-driving minivans.

There is also a growing realisation among car makers that if ride-hailing and other mobility options were to gain traction, there could be fewer people buying cars; so the best strategy was therefore to lease cars to drivers of the ride-hailing companies and work on technologies that would better integrate ride-hailing apps with their cars.

Gett and Volkswagen will now focus on ''collaborative development and market expansion of on-demand mobility services in Europe and beyond.'' Gett would provide Volkswagen with the technology for expansion beyond car ownership to on-demand mobility for consumers and businesses, Waiser said in a statement.