The Right Move for GM
The carmaker is subsidizing its autonomous vehicle strategy with its profitable core operations.
We think GM is right to focus more on complex driving in San Francisco with its Cruise subsidiary rather than rack up miles mostly in suburban and closed-course driving as Alphabet’s Waymo has done. The vehicles can learn the most in a dense city, as GM’s data shows its AV fleet of 180 Chevrolet Bolts encounters special situations such as emergency vehicles up to 46 times more often in San Francisco than in suburban Phoenix. GM expands testing to New York City in 2018. All GM AVs will be pure electric vehicles (battery electric vehicles, or BEVs) as GM feels the AV hardware can be more easily integrated in a BEV than in a hybrid or internal combustion vehicle. GM will have two new BEV crossovers by 2020 and will have at least 20 new BEVs launched by 2023. A new battery platform in 2021 will help drive GM’s BEV costs down by over 30%. This reduction plus eliminating a driver and GM gradually lowering its LIDAR costs to $300 from $20,000 presently, give management confidence to say it can make BEVs profitably but also have a profitable TAAS business.
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