General Motors is managing its investments into self-driving cars “like a Silicon Valley start-up,” the automaker’s CFO, Chuck Stevens, told Wall Street analysts today.
Stevens, in an office hours chat with Wall Street analysts, said the automaker will save money on research and development costs following the sale of its Opel and Vauxhall brands to PSA Groupe.
Meanwhile, the company is boosting its investment into the development of self-driving vehicles this year.
The company’s talk with Wall Street analysts comes as upstart Tesla Motors continues to be a darling of Wall Street while stock prices of the Detroit Three are lagging. Earlier this week Tesla’s market value surpassed Ford.
Now, Tesla, with a market capitalization of $46.7 billion, appears to be closing in on GM, which has a market value of $50.5 billion.
GM also is under pressure from billionaire investor David Einhorn to split its stock into two different classes of shares — a proposal that GM has vehemently rejected but won’t be decided until shareholders vote in June.
On Thursday, Stevens assured Wall Street that GM remains on track to hit its financial targets for the year even as U.S. industry sales are stalling and its incentive spending is creeping upwards.
Stevens also reiterated that GM expects it will sink about $150 million per quarter, or $600 million this year, into autonomous vehicle development. But on Thursday, Stevens sought to make it clear to Wall Street that the company is carefully watching that investment and eventually plans to make a profit from driverless cars.
“The autonomous program is being managed like a Silicon Valley start-up,” Stevens said. “This is a business center that is being built to drive commercial performance in the future as we take autonomous vehicles into a commercial business.”
Last year, GM paid $581 million to acquire Cruise Automation, a San Francisco autonomous vehicle start-up that specializes in the software needed to operate self-driving cars.
Stevens said GM’s self-driving car development is being led by Kyle Vogt, who was CEO of Cruise Automation, who has operational and financial responsibility for the performance of the business.
“Our view is to run this as a standalone business unit,” Stevens said.
GM’s autonomous program is being overseen by CEO Mary Barra, President Dan Ammann and Stevens.
Stevens also reminded Wall Street analysts that the company expects its cash flow will increase by about $1 billion after the sale of its Opel and Vauxhall brands. The automaker agreed to sell its European division for $2.2 billion last month and expects the deal to close later this year.
Contact Brent Snavely: 313-222-6512 or firstname.lastname@example.org. Follow him on Twitter @BrentSnavely.
Read or Share this story: http://on.freep.com/2oNcwof