GM to Have Robotaxi Service by 2019: Can Uber Survive?

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Published : December 03rd, 2017
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GM claims it will have a fleet of robotaxis by 2019 and that will be its biggest profit-maker within a decade.

GM executives, speaking at an investor conference Thursday, said the company aims to run a large-scale fleet of driverless cars in big cities by 2019. GM is among the first major driverless-car developers to attach a timeline to the commercialization of autonomous vehicles, and the 109-year-old auto maker is racing big tech companies and Silicon Valley startups to lead the reinvention of the way people own and operate cars.

GM last year earned about a profit margin of 7.5% on its $166 billion in annual revenue from global car sales. Chief Financial Officer Chuck Stevens said that the company believes a driverless-car service by 2025 will offer 20% to 30% margins and a “total addressable market of several hundreds of billions of dollars.”

Ford Motor Co. has made similarly lofty margin projections related to mobility-related services in the past, but has offered far fewer details and stayed away from specific timetables.

Alphabet Inc.’s self-driving car effort, called Waymo, has outlined plans for a future autonomous-taxi service but hasn’t said when it would launch. It said this month that it would begin offering demonstration rides to members of the public without a safety operator behind the wheel, which goes against standard procedure in the industry.

Uber Technologies Inc. also has signaled plans for a sizable robotaxi fleet, saying it would order up to 24,000 Volvo SUVs to convert to autonomous vehicles in coming years, but it also hasn’t disclosed a timetable for commercial deployment.

Mr. Stevens said GM could offer rides for less than $1 a mile by 2025—down from around $2.50 for driver-based, ride-hailing services today. That could generate profit margins roughly quadruple the profitability of GM’s core car-making business, which generated $12.5 billion in operating profit last year.

By 2019?

I question 2019. It would require legislation that has not even begun. It would also require improvements to existing technology.

However, I have no doubts about a 2021-2022 timeframe.

It should be pretty clear at this point that all the deniers are delusional.

Can Uber Survive?

If GM, Ford, and Waymo offer taxi service, what exactly does Uber bring to the table and how can they compete?

Uber is in a huge legal dispute with Waymo (Google), a battle I expect Uber to lose. If so, it may have to pay royalties to Waymo, after purchasing cars from a manufacturer.

GM and Ford can obviously get cars cheaper than Uber.

OK. Uber has an app and drivers that use the app. But how long will it take for customers to switch to a GM, Ford, or Waymo app is someone else offers a better deal?

Source : www.themaven.net
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Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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