General Motors (GM) held an analyst day in San Francisco last week to unveil the plans for its autonomous vehicle business. We liked what we heard, but we are not changing our fair value estimate. The additional revenue modeled through 2021 is not enough to merit a valuation change, and we want to see how the mobility business actually plays out over time.
Transportation as a service, more commonly called TAAS, with autonomous vehicles will be a ride-hailing business competing with the likes of Uber and Lyft. GM already owns about 9% of Lyft. We think the market was disappointed that GM said it will be ready to deploy autonomous vehicles in a commercial service at scale in dense urban environments in 2019. In recent months, management had said the service would be ready in quarters, not years. We expect the first cities to get the service to be San Francisco and New York, with Phoenix also possible, since GM already tests autonomous vehicles there.
David Whiston, CFA, CPA, CFE does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.