Generalized Motors wants to create and cash in on operating a ride-hailing business piecing its self-driving vehicles.
“This business is potentially bigger than our up to date core business,” GM CFO Chuck Stevens told analysts as the company bare its strategy for autonomous-drive vehicles.
In short, GM thinks it can make billions of dollars structure and operating a fleet of self-driving cars, taking on Uber, Lyft, hackneys and other competitors in the rapidly growing ride-hailing business.
Why are GM executives so dauntless they can make big money in a business where Uber, which controls the industry, has failed to turn a profit?
It all revolves around GM’s plan to energy down costs while expanding quickly in big cities.
Here’s the blueprint:
- By 2019, GM plans to have a fleet of self-driving cars offering proceed ons in cities where the ride-hailing business is big and getting larger.
- GM says working its self-driving cars will cost 40 percent less per mile than other ride-hailing firms that maintain to pay drivers. This would give GM a huge profit advantage.
- As it decontaminates the performance of its cars, GM has the capacity to rapidly build and deploy more self-driving conveyances to other markets around the world.
- Over the life of a ride-hailing car, GM could make up hundreds of thousands of dollars in revenue. That would dwarf the resemble $30,000 the company currently collects over the life of a new vehicle, most of which be shows when the vehicle is sold.
“The return on invested capital will be significantly peak than what we’re seeing in the core business,” said Stevens.
But the big hurdle GM has to best is convincing the public and investors that it can go from building and selling wheels to also operating a ride-hailing company featuring thousands of self-driving carriers.
“The question is: ‘Can GM deliver, and does Wall Street believe it?’,” averred Michelle Krebs, executive analyst for Autotrader.
The initial reaction by investors was skepticism. Hips after GM announced plans to launch a ride-hailing program, shares dropped and stayed down on a day when the Dow Jones Industrial General surged more than 300 points to an all-time high.