With all the investment being poured into the AV development sector, including GM's $1 billion investment in Lyft and their AV initiative, it was only a matter of time when GM came out and made an official statement regarding this issue. However, this new announcement poses a number of questions, since GM stated that it wants to start its own AV rideshare company, perhaps this timely statement was not so innocent when considering the cooled relationship between GM and Lyft in the past few months.
GM announced its vision during an investor's call after it had allowed the media and press to test ride GM AV's. The aim of GM is to develop a fully controlled system, and GM owned AV ridesharing service Cruise, that will lead to "zero crashes, zero emissions, and zero congestion."
GM President Dan Ammann stated, "We think this represents one of the biggest business opportunities of all time since the creation of the Internet." It is definitely a ground shaker for Uber and Lyft when considering the global reach and brand that GM represents. It also shows us a glimpse of the future, where car manufacturers will compete for AV ridesharing services since you don't need gig app companies as intermediaries if you already manufacture and own AV cars. This means that the future holds a global AV ridesharing war between rival car manufacturers which could dampen investor relations for Uber and Lyft, once investors realize the meaning of GM's statement.
GM is also hinting to Ford that GM's target is to reach the roads 2 years ahead of Ford. When we factor in Volvo that is working with Uber, Alphabet(Waymo) and Lyft initiative and now GM alone, it is obvious that the harder initiative is creating the AV and not the rideshare app. With global giants that have over 100 years of experience in manufacturing, sales, customer services and maintains large R&D units, does this new statement by GM suggest the eventual end of Uber and Lyft within the next 2 to 4 years?
Ammann stated that once GM comes online with its AV rideshare service customers will no longer have to deal with complex and hostile environments where drivers can be problematic and even dangerous. The AV will no longer complain about music and climate, the customer will control the inside environment of the car, and the AV will control the safety of the ride. Their service will also be cheaper then Lyft or Uber. This is actually obvious since GM will control the sales price and maintenance costs of its AV's in the group as well as use all their global sites and sales offices as ridesharing points of operation and as such, be able to out service any competition other than other car manufacturers.
Some might disagree with our observations, for instance, CEO of transportation analytics firm StreetLight Data, Laura Schewel stated that there is nothing any car manufacturer can do that rideshare company cannot catch up to.
GM doesn't agree with her, neither do we, since there are some cost factors that have to be considered when managing a fleet of vehicles, even if they are driverless. GM claims to be confident in its vision of the future and recognizes the fact that it has over a century of car manufacturing experience, over two years and billions of dollars' worth of investment in the AV research division that has grown from its original 90 staff to 1,200 and will continue to grow to well over 2,000 in 2018. Add to this the executives brought into the company to head the AV development team that includes Google's head of mapping, Netflix CHRO, and Ubers CTO. All highly experienced AV specialists. GM also claims that has enough production cost control in place to reduce the cost of an AV mile to under $1, and that is based on maintaining a fleet of electric AV cars rather then conventional gas ones, integrating their LIDAR sensors that is a GM development and will add to this mix the creation of an internet platform that will be the worlds largest and most comprehensive all car data management system including insurance, maintenance, analytics, and transit infrastructure, which will be fully operational by 2025.
While everyone in the industry is looking at the exponential growth opportunity of AV's no one is looking at the economic impact of a driverless car. The whole driver ecosystem will crash. Consider the impact on the employment economy when professional car drivers are no longer needed, add that to trucking, buses, and coaches. We are talking about stopping the income to millions of family households once the AV systems are fully incorporated. That is only regarding driver employment, how about the car insurance industry and the impact that will have on many companies. Add to that the impact it will have on a considerably smaller sector but no less important, the car maintenance industry having to deal with more efficient cars wearing down less and now add the "gadget" industry that will suffer since drivers will no longer need all kinds of driver related gadgetry and assistance needs. The impact is enormous, and we haven't really researched the impact this will have on society.
GM's Cruise CEO, Kyle Vogt stated that they have already begun testing the AV and their app in real time in Sa Francisco and Phoenix. They are using 180 test AV's and expect t reach around 1 million miles of actual road testing during the first half of 2018. This is a remarkable recovery for the car giant that was staring at bankruptcy ten years ago. While they face immediate competition from Uber and Waymo, Vogt and Ammann believe that they will be the first to successfully launch a fully operational AV system and not just AV. The differences will be in the comprehensive service and support that GM's AV division will be able to provide from day one.
To sum up, the amount of money that has been invested in AV, combined with the continuous streams of information being leaked to the press, all show that there is a steady incremental surge towards a fully integrated AV system being incorporated all over the US within the next five years. We suspect there will be a lot more competition in this market as Asian giants such as Tata rear their head.