By Aric Jenkins
November 30, 2017

The self-driving car race sped up Thursday with General Motors’ announcement that it plans to introduce an autonomous ride-sharing service to several big cities in 2019. That target is two years ahead of the automaker’s closest rival, Ford, which has plans to roll out a similar product in 2021.

GM outlined its vision during an investors call from San Francisco, where it allowed journalists to ride in prototype vehicles earlier this week. The company said it’s aiming for a future of “zero crashes, zero emissions, and zero congestion” enabled by a system entirely controlled by GM, beginning with assembly line production all the way to deployment using its own ride-hailing service.

“We think this represents one of the biggest business opportunities of all time, since the creation of the Internet,” Dan Ammann, GM’s president and chief of autonomous vehicle strategy, told investors.

General Motors’ plan calls for creating autonomous vehicles that can drive more safely than humans, roll out the cars at scale in dense urban centers with “complex environments,” and integrate them with software that users can use to request rides on-demand — at a significantly cheaper cost then competitors like Uber and Lyft, GM said.

“No longer will you have to have conversations with drivers that you don’t want to have,” Ammann said. “No longer listen to music you don’t want to listen to, and there will no longer be creepy driver syndrome.”

Some wouldn’t put it past traditional ride-sharing companies to close the gap, however.

“There’s nothing GM is doing that Uber and Lyft couldn’t catch up on,” Laura Schewel, CEO of transportation analytics firm StreetLight Data, told Fortune.

But General Motors is confident in its ability to achieve its ambitious goals for several reasons. First, it’s been building cars for more than a century. Secondly, it recently added self-driving expertise in the form of Cruise, a San Francisco-based startup GM acquired in 2016. Since then, the number of employees in its autonomous vehicle division has skyrocketed from around 90 to approximately 1,200. (GM expects that number to hit 2,100 by next year.) The automaker has also poached top tech industry talent, including Uber’s chief technology officer, Netflix’s chief human resources officer and Google’s head of mapping operations.

Besides the factors that GM can control, the company also feels that consumer demand will drive the market. It says it can reduce the average cost of ride-sharing services from roughly $2-3 a mile to “well under” $1 a mile by 2025 thanks to in-house production of LIDAR sensors that help the cars “see” and battery cells. (“We believe that all [autonomous vehicles] must be [electric vehicles],” Ammann said.) GM also claims the cars will help create “the world’s largest internet of things platform,” an economic ecosystem with business opportunities ranging from data collection to insurance services and transit infrastructure.

“Transportation as a service penetration is in the very early stages,” Ammann said. “Ride-share is only 0.1% of all U.S. miles driven. We still have 99.9% of the opportunity in front of us.”

There could also be negative economic consequences of GM’s plan as well, according to Frank Petrilli, a land use law attorney at Arent Fox.

“The whole economic system around privately-owned vehicles would be wiped out, and no one is really having those conversations yet,” he said. “Moves like what GM is making is going to trigger a response from the auto insurance industry and all the Uber drivers who will be made obsolete, so I think there’s going to be a backlash there.

“If it’s market-driven and cities are super reactive, what you’re going to end up with is a ton of sprawl with people choosing to live two to three hours outside of the city, which creates social equity issues,” Petrilli added.

Nevertheless, GM has been making progress with its computerized simulations that will ensure passenger safety, the company said. Up to 150 simulations are run per minute, according to Cruise CEO Kyle Vogt, and the company has deployed 180 test vehicles throughout San Francisco and the Phoenix suburbs that will reach 1 million miles of on-road testing per month by early 2018. Cruise and GM’s confidence is such that they launched a beta version of its ride-hailing app for employees to test the service. “We have people in San Francisco that use this app as their primary form of transportation,” Vogt said.

A decade ago, GM was in the midst of a painful bankruptcy, and few would have predicted the company could be at the forefront of any kind of technological revolution. Now, despite the competition from Ford and Silicon Valley giants such as Alphabet’s Waymo and Uber, GM believes it’s a “first mover,” according to Ammann, with the ability to control the market. He says it’s the only company working on a fully-integrated platform and it believes the technology will completely change the world — and soon.

“[GM] knows how to do this,” Vogt said. “They’ve been doing this for 100 years. We’re doing this for autonomous vehicles, too.”

“I do like that the GM plan is a ride-share because it’s incrementally accessible,” StreetLight Data’s Schewel said. “Assuming regulatory hurdles are not coming as a surprise, I think it’s realistic. The amount of investment there is immense.”

SPONSORED FINANCIAL CONTENT

You May Like

EDIT POST