Skip to Content
Morningstar

The Right Move for GM

The carmaker is subsidizing its autonomous vehicle strategy with its profitable core operations.

Securities In This Article
General Motors Co
(GM)

We think GM is right to focus more on complex driving in San Francisco with its Cruise subsidiary rather than rack up miles mostly in suburban and closed-course driving as Alphabet’s Waymo has done. The vehicles can learn the most in a dense city, as GM’s data shows its AV fleet of 180 Chevrolet Bolts encounters special situations such as emergency vehicles up to 46 times more often in San Francisco than in suburban Phoenix. GM expands testing to New York City in 2018. All GM AVs will be pure electric vehicles (battery electric vehicles, or BEVs) as GM feels the AV hardware can be more easily integrated in a BEV than in a hybrid or internal combustion vehicle. GM will have two new BEV crossovers by 2020 and will have at least 20 new BEVs launched by 2023. A new battery platform in 2021 will help drive GM’s BEV costs down by over 30%. This reduction plus eliminating a driver and GM gradually lowering its LIDAR costs to $300 from $20,000 presently, give management confidence to say it can make BEVs profitably but also have a profitable TAAS business.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

More in Stocks

Tesla: Shareholder Vote Reduces Key Person Risk

We continue to view Tesla stock as slightly undervalued.
Seth Goldstein, CFA

After Earnings, Is CrowdStrike Stock a Buy, a Sell, or Fairly Valued?

With strong execution but a stretched valuation, here’s Morningstar’s take on CrowdStrike stock.
Malik Ahmed Khan, CFA

Adobe’s Strong Quarterly Results Drive Share Gains

We’re raising our fair value for the software stock, which upped its full-year outlook.
Dan Romanoff, CPA

About the Author

David Whiston, CFA, CPA, CFE

Strategist
More from Author

David Whiston, CFA, CPA, CFE, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007.

Before Morningstar, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner. In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011.

Sponsor Center