People don’t want cars, they want rides. That’s the existential fear plaguing automakers today. And they’re scrambling to do something about it.

Just months after GM poured money into Lyft (the one with the pink mustasche), Toyota and Volkswagen both said today they were joining up with other ride-hailing rivals. In VW’s case, it’s investing $300 million in Israeli ride-hail startup Gett. Toyota, meanwhile, is partnering with Uber to, among other things, let people automatically deduct their car payments from the fares they make as Uber drivers.

Clearly automakers have Silicon Valley envy. Startups are transforming the way people move around cities. In order to stay relevant, car companies are trying to show they understand that on-demand services have changed consumer behavior. Driving yourself around in a car you own, it turns out, isn’t the only way to get around anymore—a trend that’s likely to become only more pronounced when the cars start driving themselves.

To be sure, the actual details provided by the companies about how these joint efforts will work have been scant. Toyota did not disclose how much money it invested in Uber. The two companies merely said they had entered into a “memorandum of understanding” to explore a collaboration. The one concrete detail is that Toyota will create new leasing options that allow drivers to cover their payments through their Uber earnings, a more direct version of Uber’s existing leasing programs.

As for Volkswagen, the beleaguered automaker is still looking for ways to revamp its ruined image following the revelation of a vast scam to cheat on emissions tests. Gett isn’t that well known in the US but is available in 60 cities worldwide, with an especially strong presence in Europe.

From Ride-Hailing to Self-Driving

But for car companies, the on-demand ride market is just a first step toward a more radically altered future dominated by autonomous vehicles—vehicles whose brains are powered by Silicon Valley tech under development by the likes of Google, Tesla, and Uber itself.

But how will people actually use self-driving cars on the road? One likely scenario: they’ll use their phones to summon them for a ride. Volkswagen says Gett’s big-data technology and predictive algorithms could serve as a foundation for a viable on-demand autonomous car operation. Toyota and Uber are more vague, saying only that the partnership would accelerate their research efforts. But it’s not hard to see where this is going, especially in light of Toyota’s own move to hire an artificial intelligence and robotics research team late last year.

In a sense, even Apple’s massive $1 billion investment in Chinese ride-hailing giant Didi plays into this trend. Apple is under increasing pressure to find other ways to grow as the global smartphone market slows down. Maybe on-demand rides are it. Ride-hailing still has a long way to go before people stop buying cars in favor of just summoning rides. But that future could come, and automakers know it.

Excerpt from: 

Calling an Uber Is Cooler Than Owning a Car—And Automakers Want In