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Lyft, Uber’s biggest US rival, is expanding its ride-hailing business across the Atlantic for the first time with the €175mn acquisition of European taxi app FreeNow.
The sale of Hamburg-based FreeNow by its current owners BMW and Mercedes-Benz marks the latest step in a long retreat from “mobility services” such as ride hailing and car rentals that a decade ago were fuelled by automakers’ fears of looming “peak car” ownership.
Lyft, founded in San Francisco in 2012, operates across the US and Canada but decided to branch out beyond North America after reporting its first full year of net profits in 2024, according to chief executive David Risher.
“Yesterday, the company just wasn’t ready” for international expansion, Risher told the Financial Times. “But we’re financially very strong now . . . we’ve been putting a lot of the basics in place so that we can now build on top of that.”
Despite the progress, the $4.55bn company has seen its stock fall by 20 per cent so far this year. Shares in Uber, which has a market capitalisation of $155bn, are up 17 per cent since the beginning of January.
Risher said the stock market gyrations that have accompanied the first three months of the Trump administration — which have forced many mergers and public listings to be delayed — should not affect Lyft’s all-cash acquisition of FreeNow, which is expected to close in the second half of this year.
“We are thinking long term about this,” he said. “Long term, I think we have good reason to believe that there will be great transatlantic partnerships of all kinds.”
Combining Lyft and FreeNow will create a business serving more than 50mn annual riders and bolster their competition against Uber, which dominates in the US and Europe.
With the acquisition, Lyft is following its long-standing rival by embracing the taxi industry once seen as the Silicon Valley disrupters’ arch nemesis. FreeNow, which operates in 150 cities across Europe, makes the vast majority of its revenue from its 6.3mn passengers hailing traditional taxis, including London’s black cabs.
In recent years, Uber has added taxis in dozens of markets, including New York, Paris and Madrid, giving it a greater foothold in regions that also heavily regulate its original ridesharing model.
Lyft has recently begun to apply for taxi operating licences in some parts of the US. Risher said FreeNow’s fleet management technology would boost Lyft’s efforts to diversify its business and grow its addressable market. “We are embracing [FreeNow’s] taxi-first business model,” said Risher.
Taxis in Europe tend to have slightly higher average fares than ridesharing apps, according to FreeNow chief Thomas Zimmermann.
FreeNow, which has broken even since the middle of last year, posted gross bookings of more than €1bn in 2024 and continues to see revenue growth across its markets, said Zimmermann.
According to mobile market intelligence provider Sensor Tower, FreeNow has seen the number of monthly active users of its app in the UK and Europe decline over the past year, at a time when Uber continued to grow.
Zimmermann said app usage did not necessarily correlate to number of rides booked and noted that FreeNow had cut back on promotions and incentives in the past year to boost profitability, even as some competitors made “very unreasonable spend” to lure customers and drivers.
In 2019, BMW and Mercedes had pledged to jointly invest more than €1bn across a handful of mobility apps, including car sharing, parking and charging services. One such venture, ShareNow, was sold to Stellantis in 2022.
In a statement this week, BMW and Mercedes-Benz Mobility said after being “pioneers in the development of digital mobility services”, they would now “continue to focus on their core operations and their transformational development to electrification, digitalisation and AI as well as decarbonisation”.