The autonomous car war is not only heating up, but it’s also getting messy. Most recently, General Motors Company (NYSE:GM) has entered discussions with ride-sharing service Uber… an interesting move, considering it wasn’t that long ago the carmaker told GM stock owners it was investing half a billion dollars in Uber’s rival Lyft to help advance its self-driving vehicle ambitions.
If the news seems vaguely familiar to owners of Alphabet Inc (NASDAQ:GOOGL), there’s a reason (though the opposite one). A few years back, Alphabet teamed up with Uber to help develop and commercialize its Waymo autonomous driving technology, but this month Alphabet invested $1 billion in Lyft. The investment more or less implies a partnership.
In the meantime, Ford Motor Company (NYSE:F) — arguably the laggard “major” when it comes to self-driving cars — is also working with Lyft, while Tesla Inc (NASDAQ:TSLA) isn’t (officially) teaming up with any ride-hailing outfit despite being the furthest along in self-driving vehicles.
It’s an awful lot of jockeying and alliance-formation, begging just one question from current and prospective owners of GM stock: Where is General Motors, really, with its autonomous car platform?
Answer: Closer to the endzone than you might realize.
(Almost) Ready to Roll
If you live in Manhattan and you see a driverless Chevy Bolt on your streets early in the coming year, don’t freak out. It’s under control, directed by a complex orchestration of cameras and sensors.
Actually, you won’t see a truly driverless GM car on the streets of New York City just yet. Two people will be in the vehicle during this all-important test, just to make sure the driving system doesn’t do anything squirrely or dangerous. The company is assuming, however, that the vehicle is going to perform exactly as expected.
Don’t look for a successful test of General Motors so-called “Cruise” technology to instantaneously drive the GM stock price higher. Truth be told, the company’s already got self-driving cars being tested on the busy streets of other major cities. On the other hand, if its Cruise platform can handle the crazy driving conditions in Manhattan… Well, like the song says: “If it can make it there, it can make it anywhere…”
But what does this mean in terms of a time horizon? Nobody really knows, though Deutsche Bank research analyst Rod Lache recently commented about General Motors’ autonomous car capabilities, “We now believe that these may be deployed without human drivers within the next six quarters (potentially years ahead of competitors).”
Envied by Rivals
It seems remarkable, almost to the point of being unbelievable, at first. A closer inspection of everything GM has either built or acquired to this end, however, makes the short time frame seem plenty plausible.
Case in point? Its Cruise division, for one. It wasn’t built, but bought in one fell swoop last year for a cool $1 billion. It was a real coup, too, becoming the foundation for a self-driving car arm that’s since become the envy of others in the autonomous car race. And just this month GM acquired LIDAR (light detection and ranging) startup Strobe, adding a crucial cost-saving capability to its self-driving automobile systems.
The end result of all this assembly work? GM President Dan Ammann explained “By having all those capabilities under our control and making sure we have the ability to do that is enabling us to move really quickly… The unique advantage is having all capability under one roof.”
He may have understated the upside. More than that, though, it’s interesting that he said there probably wouldn’t be any more major acquisitions, suggesting the company has all the pieces of the puzzle in place.
Bottom Line for GM Stock
As for the revenue-generation potential of Cruise and impact on GM stock? Again, that’s one of the things that nobody really knows for sure. To the extent educated guesses can be made though, Lache thinks introducing self-driving vehicles to its startup car-sharing service Maven could make that venture worth $30 billion on its own, assuming GM would capture 17.5% of that sliver of the mobility market. From a different vantage point, some feel the autonomous vehicle market itself will be worth nearly $127 billion by 2027.
However General Motors decides to capitalize on the flexible-mobility movement — and bear in mind it will almost certainly address the market in more than one way — it’s difficult to think the company isn’t out in front of all the rest. Throw in the fact that the all-electric Chevy Bolt is the nation’s first practical, affordable and widely-available electric vehicle, and it’s difficult to not like GM stock. Splitting its partner focus between Lyft and Uber is just smart business, building multiple relationships that could drive the use of its autonomous cars.
As of this writing, James Brumley held a position in Ford Motors. You can follow him on Twitter.
