GM looks to get ahead of driverless ride-hailing pack
SAN FRANCISCO – General Motors plans to roll out a driverless ride-hailing fleet by 2019 that eventually could become a core part of the automaker’s business.
GM executives told investors here Thursday that by 2025, autonomous vehicle cost reductions and increased consumer adoption should combine to drive the price of such transportation down to less than $1 per mile, or about a third of current ride-hailing prices.
Without a driver to pay, profits from autonomous ride-hailing fleets would go directly to whatever companies run them, with the main cost of business being maintenance. Advocates say self-driving cars can drastically cut into not just pollution but the 40,000 annual road deaths resulting from driver error.
“We’re aiming for a future of zero crashes, zero emissions and zero congestion,” GM CEO Mary Barra said.
Aside from the autonomous future, GM executives said the company sees a clear path to profitability through a wide array of electric cars, which so far have
yet to take hold with consumers due to a combination of cost and range anxiety.
By gradually reducing the price of EV through battery development, consumers should gradually come around, said Mark Reuss, executive vice president of global product development. “We need to accelerate acceptance of electric vehicles,” he said. Electric vehicles make up about 1% of auto sales. GM’s current entry in the pure electric category is the Chevrolet Bolt.
But it is autonomous, or self-driving, technology that can really drive a profitable new business for the storied manufacturer, which in 2016 bought tech start-up Cruise Automation in order to accelerate its self-driving car plans.
“General Motors is sending the message to investors that it is speeding towards an autonomous electric future that will include ride-sharing and will be profitable,” said Michelle Krebs, executive analyst at Autotrader.
GM officials said it was the only company building self-driving cars on an assembly line, which is key to ensuring such a fleet can be built reliably at scale.
“Getting to the point where we can launch this technology is the beginning of the journey; it will rapidly improve from the minute it is launched,” said Dan Ammann, president of autonomous vehicle strategy. “There will be a steep and massive learning curve, and the product will massively get better.”
But public acceptance of self-driving vehicles should be easier when people see the compelling price difference when it comes to autonomous car ridehailing.
Ammann put up a slide indicating that today’s typical Uber or Lyft ride costs around $2.50 per mile, with 75 cents going back to the company and the rest going to the driver. By the time company costs are paid, each ride ends up requiring a subsidy.
In contrast, by getting rid of the driver, all of a $1.50-per-mile ride cost goes back to the company running the selfdriving vehicles, which in turn can run constantly much like an airplane is always in use unless it is being serviced. That per-mile cost can eventually drop to less than $1 once economies of scale and consumer adoption are achieved.
Ammann also said the ensuing selfdriving car network would lead to the “biggest IoT (Internet of Things) network ever,” providing unparalleled amounts of data on cars and roadways that also can be monetized to, for example, help government officials in overhauling infrastructure to adapt to the new transportation reality.
Other opportunities for profit will come from an eventual reduction in the cost of both batteries and LiDAR (light detection and ranging systems) sensors, Ammann said.
Cruise CEO Kyle Vogt said although many companies are working on autonomous vehicles, there is an opportunity to grab market share with better tech.
“Software is the differentiated product (with AVs), meaning a company is developing it and if you’re sufficiently advanced may not be able to compete,” he said. “That’s how you can create a gap between AV ride-sharing experiences that can leave us with a competitive advantage.”
Vogt said Cruise currently has 180 self-driving Bolts, which will also begin testing in places such as Phoenix and New York. He said weather, mapping and regulations are among the potential speed bumps for any public AV program.
GM’s road map throws a gauntlet down to Google-owned Waymo, whose
8-year-old self-driving car program has been aggressively pushing the envelope of autonomous car tech.
Waymo currently is testing a fleet of
100 self-driving Chrysler Pacifica Hy- brid minivans in the Phoenix area with residents using the vehicles often as a replacement for their own cars.
Analysts long have anticipated that the first rollout of consumer-ready selfdriving cars would be part of a ride-hailing network and not as privately owned vehicles.
As recently as last month, Cruise was aggressively road-testing Chevrolet Bolt electric cars strapped with a variety of Cruise self-driving radar, camera and LiDAR.
In a recent Medium post announcing the October testing, Vogt said that the hilly city by the bay was ideal for challenging autonomous cars.
“Our vehicles encounter challenging and often absurd situations up to 46 times more often than other places selfdriving cars are tested,” Vogt wrote. “And while we’re generally drawn to tough problems, we test in SF only because we have to. We believe it’s the fastest path toward deploying self-driving cars at scale.”
The news was unveiled at an event so targeted to investors that GM opted to invite only media outlets it felt communicate directly with the financial community. That group included NBC, Bloomberg, Bloomberg TV, Business Insider, The Wall Street Journal and Forbes.