Progress on a potential initial public offering from gm’s autonomous vehicle division

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Gm is keeping its distance from self-driving cars.

Bloomberg news reported last week that the automaker is considering strategic options for its Cruise autonomous car unit, including public share sales and stock tracking. Gm wants to first business orientation to business success, so decision is not imminent, but talks on the future of cruise’s public market itself is remarkable, especially in softbank group invested $2.25 billion in this business.

This demonstrates how far gm has come in the race for autonomous leadership, and also highlights the adventures of rival ford motor co. ‘s self-driving cars.

Gm bought Cruise for nearly $1 billion in 2016 after considering incentives for key talent. Last year, ford spent $1 billion on Argo AI, an autonomous start-up, but it did not do well. While gm believes it can introduce self-driving taxis by 2019, ford aims to make its debut in 2021.

‘there’s a slow way,’ Mr. Ford said. It will prioritise the path to profitability through pure speed. The idea is worth mentioning as more and more companies compete to develop autonomous cars. They can’t all win, so why not find a way to make the best use of this technology once it exists? In that regard, on Friday, RideOS, a start-up that develops route and scheduling software, announced a partnership with ford’s autonomous unit. This follows ford’s partnership with Domino and Postmates to test autonomous delivery. This is in part reminiscent of the service products that industrial companies rely on to offset low-margin product sales.

The question, of course, is whether the eventual leaders of robotaxi services want to use third-party technology or just develop their own. Autonomous vehicle navigation services and delivery capabilities can be said to be as competitive as the car itself. With ford’s car spending still high, the emphasis on driving technology margins has not paid off. A quick look at the performance of ford’s stock relative to gm can tell you what investors think about the comparative strategies of these companies.

This reminds me of the ultimate public market choice for general cruise ships.

Investors realize automated driving technology is the future, gm’s progress here must give them encouragement, but they don’t like in the booming industry competitive spending as needed. These traditional manufacturers’ business models don’t give investors much confidence, especially in cases like general motors, where you have a history of bankruptcy. The separation of cruise automation operations will help ease this tension and provide greater financial flexibility to subsidiaries.

But any type of equity sale or tracking would be a temporary solution. Overly complex structures can end up being a drag on evaluation. Notably, gm used tracking stock for its hughes electronics division. Hughes’s defense arm was sold to Raytheon in 1997, while automotive electronics components were converted into general motors’ Delphi motor company, which was later spun off. General motors sold a tracking stake in its remaining telecommunications products to news corp. in the early 2000s. The business eventually became DirecTV, which AT&T inc. acquired in 2015.

In view of this, it is easy to imagine a public general cruise business become takeover targets, or sort out once the winners and losers of the competition and can be a merger with another self-driving. If gm maintains its current momentum, it is more likely to negotiate Cruise’s future from a position of strength.

 

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