GM looks toward self-driving future after posting $2.1 billion Q1 profit

General Motors plans big push into the autonomous vehicles marketplace.

General Motors is pushing toward a self-driving future after posting a $2.1 billion net profit in the first quarter of 2019.

After the automaker reported its earnings this week, GM CEO Mary Barra addressed a potential autonomous vehicle launch in a statement reported by Detroit Free Press.

“I think you’ll see updates later this year. We are very pleased with where we’re at on our continued rate of progress,” Barra said. “We’re doing our testing in one of the most complex environments in the U.S. (San Francisco). We have a very strong position and we have a very strong safety record.”

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Barra’s positive outlook underscores remarks she made in February that the company continues “to make rapid progress in technology.” Her statement also falls in line with GM’s determination to lead the charge in EV and AV vehicles.

Progress and Profit Driven by Strong Truck Sales

Strong GM truck sales helped drive strong Q1 profits, particularly in the 2019 Chevrolet Silverado and GMC Sierra light-duty crew cabs. Sales of these pickups also increased 20 percent year over year.

In the U.S., GM delivered over 665,000 vehicles in the first quarter. A mix of truck, SUV, and crossover sales topped 80 percent, with the Chevrolet Trax, Equinox, and Colorado all notching Q1 sales records. Furthermore, average transaction prices for all-new crew cabs were up $5,800 as opposed to exiting models.

Despite netting profits exceeding $2 billion, the company’s earnings before interest and taxes dipped 11.5 percent. Net revenue also decreased 3.4 percent.

In looking ahead, GM remains focused on progress and will likely count on its core business to help fund its technological advances. However, some analysts are skeptical of GM’s aggressive autonomous vehicle goals.

Self-Driving Skeptics

For some, zooming around in a driverless car might seem like something that can only happen in a “Star Wars” or Marvel Studios movie. From analysts to average drivers, many people continue to debate the safety and feasibility of a society filled with completely autonomous vehicles.

Many also wonder if drivers are ready to give up control and let a self-driving car “take the wheel.”

According to a 2018 Strategic Vision survey, less than one in 10 new car buyers said they “love” the idea of owning a full self-driving car. That figure doesn’t bode well for attracting early AV adopters.

Despite any misgivings, self-driving technology exists, and automakers will continue to develop it. Still, some analysts feel releasing a mass quantity of autonomous vehicles will take longer than many automakers project. This includes General Motors.

“I am sure the people in GM and elsewhere have realized the challenge of what they’re trying to do for a long time,” said Sam Abuelsamid, principal analyst at Navigant Research in Detroit. “I think the reason GM has been so bullish on it publicly is to rally the stock market behind it and get the support that technology companies get.”

Likewise, Maryann Keller, principal of Maryann Keller & Associates in New York expressed doubt about the level of self-driving car General Motors might deliver.

“GM will bring something out, they’ve made the promise, so they’ll have to show something. Whether it’s a fully functional, driverless car…my guess is probably not.”

Are the skeptics right? Or, will GM surge ahead in its self-driving mission and prove naysayers wrong? Mary Barra seems confident in GM’s self-driving future. However, the auto giant also faces competition.

Competition Closes In

There is a strong push among automakers to lead the autonomous driving race. Uber just scored a $1 billion investment from Toyota, Denso, and SoftBank to develop self-driving tech. However, Uber must compete with companies like Alphabet, Inc., (which owns Waymo) and GM Cruise. It also suffered scrutiny when an Uber self-driving SUV hit and killed a pedestrian (though the company will not face criminal charges).

Waymo asserts itself as a leader in autonomous vehicle development. The California-based company launched the nation’s first commercial autonomous ride sharing service, Waymo One, late last year.

More recently, Waymo announced it is partnering with American Axle & Manufacturing to repurpose an existing facility in Detroit to mass produce self-driving cars. This major move puts a chief competitor right in the heart of General Motors’ Michigan birthplace.

Maintaining an Autonomous Edge

Overall, GM maintains an edge in the autonomous vehicle landscape. In fact, Navigant Research’s 2018 Automated Driving Vehicle Leaderboard placed General Motors at No. 2 on its ranking behind Waymo at No. 1 and above Ford at No. 3. Elon Musk’s Tesla, notably, didn’t even make the Top 10.

At least one analyst, Karl Brauer, executive publisher of AutoTrader and Kelley Blue Book, believes GM is a self-driving leader. As such, he believes any self-driving delivery GM makes will be significant and could drive up company stock.

“GM is still one of the leaders in that race, right up there with (Waymo),” Brauer said. “That’s perception, and perception is what drives the stock price.”