General Motors Co. shot down speculation that it’ll spin off its business units working on self-driving vehicles and car-sharing, which one analyst has estimated could be worth as much as $30 billion.
“All of our focus right now is on moving as fast as we can to get to commercial deployment of this technology in the safest way possible,” GM President Dan Ammann said in an interview with Bloomberg Television. “We believe the best way to do that is having all the capability under one roof.”
GM’s stock been climbing for weeks on optimism about its burgeoning mobility businesses. Those units include Cruise Automation, which Ammann said Oct. 17 will begin testing autonomous vehicles on the streets of New York City early next year. Deutsche Bank analyst Rod Lache upgraded the stock to a buy last month and said management didn’t refute the logic behind his prediction for a spinoff.
The shares fell 1.6% as of 3:30 p.m. Oct. 17 in New York trading. They’ve still advanced 29% this year, more than doubling the increase for the benchmark S&P 500 Index.
GM’s New York testing will be made possible by legislation in this year’s state budget, which had the effect of reducing the city’s authority to regulate the introduction of autonomous vehicles to some of the most congested urban streets in the world. Governor Andrew Cuomo didn’t consult with Mayor Bill de Blasio’s office about the plan, according to Eric Phillips, the mayor’s press secretary.
“We have very real safety concerns,” he said. “We are obviously looking forward to some detail on this idea before any cars hit the streets.”
The city was first alerted two months ago, before GM started preliminary mapping of a geofenced area where Cruise will test its vehicles, according to Richard Azzopardi, a Cuomo spokesman. “I’m sure whatever concerns the city may have will be addressed,” he said.
GM is moving faster than foes on autonomous cars because it has the in-house capability to engineer, develop and manufacture vehicles using advanced software, Ammann said. Cruise, which GM acquired last year, is expanding a test fleet that’s already been on the roads in San Francisco and Scottsdale, Arizona, to about 180 vehicles across three cities.
The company’s car-sharing business Maven also has been spreading to more cities and renting out vehicles to Lyft Inc. and Uber Technologies Inc. drivers.
Ammann said GM envisions controlling and operating its own self-driving car-sharing service and said this could be significantly more profitable than its existing business.
With assistance by David Welch