GM Needs to Walk the Tesla Talk

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The company specifically set fast financial targets for its autonomous taxi business at its latest investor conference

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The sight itself was not surprising – Fordhandjob

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Volkswagen and Chrysler-owner Stelantis have talked new business opportunities this year in comparable investor days—but so were the numbers. GM has generated an average annual revenue of $138 billion over the past five years. From that basis, it expects roughly 5% annual growth from its traditional business of selling and financing light vehicles, including electric vehicles, and on top of that exponential growth in a range of complementary services that remain mostly in the startup phase today. .

By far the most mature of these services is OnStar, which GM has built over 25 years as a roadside support service enabled by wireless technology. It probably accounts for the bulk of the $2 billion in high-margin revenue the company said it makes today from subscriptions. As onboard Internet connections and operating systems move in line with the smartphone industry, GM expects that number to grow rapidly — between $20 billion and $25 billion by 2030.

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This bullish launch seems almost timid next to GM’s claims for Cruise, the San Francisco-based autonomous-vehicle operation it bought in 2016. Dan Amman, former investment banker who has run the unit since 2019 and brought in Honda, SoftBank, Microsoft and Walmart. As minority shareholders, the company is expecting $50 billion in revenue by the end of the decade. Cruise is still perfecting the notoriously challenging technology needed to offer driverless taxi rides to consumers, yet Mr. Ammann expects things to start rolling out after 2023.

It’s this kind of aspirational future that has eluded Tesla with a cult following and stock-market valuations. Which is the point: GM’s incident was linked to implicit references to challenge the American EV leader.

Ms Barra can’t be blamed for trying to capture as much of the auto-tech enthusiasm as she can, but at Elon Musk’s company it’s easy to connect the dots between the present and the future. While Tesla has been increasingly vying for the already popular EVs, GM has shrunk in recent years as part of a strategy to focus on profits rather than revenue, and this summer due to the fire risks of all of its Bolt recalled the EV. More than big promises about the still-distant future, the company needs its next-generation flagship models, such as the Cadillac Lyric due next year, to attract consumers on the road.

The good news for investors is that none of GM’s growth hopes are in its stock, which fell on Wednesday with the broader market and still trades at eight times forward earnings. If even a small fraction of the company’s new business plans come to fruition in the coming years, shareholders could still get a lift.

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