General Motors Co. (NYSE: GM) may well have a self-driving, ride-sharing car in the market within two or three years. The effort is a huge advancement in the manufacturer’s plans to be part of the next generation of widely sold vehicles. However, management still has to wrestle with its slowly dying primary business of traditional, gasoline-powered cars, the sales of which run well into the millions per year.
GM CEO Mary Barra said: “GM is committed to a future where we have zero crashes, zero emissions and zero congestion.”
The cost of using the vehicles will be about $1.50 a mile. Presumably, GM will need to substantially underwrite the expenses of the vehicles and the service because it will build a very limited number of the self-driving products. That is among the hurdles GM faces. It will need to invest hundreds of millions of dollars just to start the process that makes the new products and services available.
Wall Street has not turned its back on GM, but neither has it given management much of a vote of confidence. GM’s shares are higher by 22% in the past year to $34.20. The S&P 500 is up 21% over the same period. It has done much better than crippled Ford Motor Co. (NYSE: F), the shares of which are only 2% higher over the past year to $10.89.
GM sold 10 million cars and light trucks last year. That put it slightly behind Toyota Motor Corp. (NYSE: TM) at 10.2 million and Volkswagen at 10.3 million. GM has abandoned its position in Europe via the sale of Opel and Vauxhall. It is still the leading car company in the United States and holds one of the top two places in China’s market, the world’s largest. Its primary rival for the top spot is VW.
China will become a mixed bag for global manufacturers. The air pollution problem in the nation is so bad that there is a rush toward electric vehicles. Local car companies will capitalize on this trend, as will every other world manufacturer that wants to hold market share in China. The electric and self-driving car business is about to become wildly competitive.
GM’s annual sales of gas cars will be under 9 million this year because of the loss of sales in its Europe operations. That still leaves it with 8 million cars, most of the models of which GM believes do not have much of a future.