While Tesla (TSLA) cars with self-driving features have been on the road for years, General Motors (GM) may hold the edge in making autonomous vehicles available to the public on a mass scale.
X GM's commercial deployment of autonomous cars will happen much sooner than expected and the established auto giant's leadership in this area may surprise investors, Deutsche Bank research analyst Rod Lache and his team wrote in a Sept. 24 note, while bumping up GM stock to "buy" from "hold" with a price target of 51. Meanwhile, Deutsche Bank has a "hold" rating on Tesla.
"We now believe that these may be deployed without human drivers within the next six quarters (potentially years ahead of competitors)," the analysts said, noting that GM is already testing autonomous vehicles in "complex urban environments" such as San Francisco.
Other reasons for GM's advantage listed include:
- GM recently indicated it has developed "the first mass producible self-driving car, built at a plant capable of producing 100,000's vehicles per year."
- A faster-than-expected production ramp-up could boost advantages for GM because its artificial intelligence will improve based on data from thousands of vehicles.
- Faster deployment of self-driving fleets and infrastructure "could provide GM with sustainable competitive advantages, through the creation of natural monopolies in major cities."
- Business models — such as shared, self-driving, on-demand mobility services — enabled by emerging automotive technologies "could be material, even to a company as large as GM."
- And there is nothing from a legal or regulatory standpoint holding back GM if its technology is ready, as long as it complies with Federal Motor Vehicle Safety Standards.
GM stock climbed 2.2% to close at 40.30 on the stock market today, hitting the highest level in more than 3-1/2 years and further extended past cup-with-handle base buy point of 36.73. Tesla fell 1.7%, falling below its 50-day average and triggering a loss-minimizing sell signal. Ford (F) edged up 0.8% while Fiat Chrysler (FCAU) lost 2.45%.
IBD'S TAKE: GM stock shows rising relative strength, a positive technical sign. See if it can clear this key benchmark.
In addition to GM's self-driving efforts, the company also has been expanding the reach of Maven car-sharing service, which launched in 2016.
Deutsche Bank's Lache predicted GM's mobility business will be the main focus of future investor events and gave it an enterprise value of $30 billion.
"We believe that GM will be positioned to capture healthy share, especially in the U.S., if they are able to seize on a first mover advantage," he wrote, adding that 17.5% market share is conceivable given that GM has 17.5% share of the light vehicle market and is well ahead of its rivals in autonomous on-demand mobility.
"The bull case for Maven is too big to ignore."
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