Why General Motors May Be The Real Deal Among 'Mobility' Companies

Automakers are keen to rebrand themselves as "mobility" companies, but General Motors ( GM ) may have an ace up its sleeve vs. rivals such as Ford Motor ( F ) and Tesla ( TSLA ) in a future where Americans prefer rides in shared fleets of self-driving, electrified vehicles.

[ibd-display-video id=2848573 width=50 float=left autostart=true] In a note out Friday, Piper Jaffray said that GM is a likely top beneficiary of "disruptive" trends such as automation, connectivity, electrification and ride-sharing. Here are three reasons:

First, GM appears poised to "shortly begin implementing a real, revenue-generating business model" tied to shared, self-driving fleets, unlike most of its peers, analyst Alex Potter said.

The Detroit automaker announced in November that it plans a robotaxi service in big cities within two years , potentially giving it a crucial head start against challengers that could translate into a competitive "moat" they can't penetrate.

Second, GM's "new mobility" strategies are largely based on proprietary technology and in-house capabilities, Potter added. Its self-reliance could give it a first-mover advantage and a big edge over rivals who are in multi-party (and slower-moving) alliances.

Such alliances that cross the auto and tech sectors are plentiful. Ford cozied up to ride-share service Lyft in September to put self-driving fleets on the road, while Lyft's earlier relationship with GM is said to have cooled. Fiat Chrysler ( FCAU ) in August joined an existing self-driving partnership between BMW ( BMWYY ) and Intel (INTC)/Mobileye.

European automakers Volkswagen (VLKAY) and Volvo have self-driving partnerships with chipmaker Nvidia (NVDA). Telsa is said to working with AMD (AMD) on a self-driving chip. Waymo, the self-driving unit of Alphabet (GOOGL), relies on Intel chips and Chrysler Pacifica hybrid minivans.

Third, GM's "increasingly simplified structure" allows it to focus on core areas such as mobility solutions, as well as the North America and China auto markets and its car-finance unit, Potter said.

GM retreated in 2017 from several money-losing global markets. It shed its European Opel-Vauxhall units in March, then said in May that it will stop selling cars in India. It also cut staff in Singapore and exited South Africa.

GM closed flat at 42.02 on the stock market today . Shares are forming a flat base with a 46.86 buy point and a 45.45 alternative entry. But the base has no up weeks in heavy volume and three down weeks in above-average volume, which could be seen as a weakness. GM also is below its 50-day moving average.

Among other auto stocks, Ford and BMW gained 0.6%, Fiat Chrysler jumped 3% and Tesla rose 1.25%. Intel advanced 0.6%.

IBD'S TAKE : As cars become increasingly infused with technology, which chipmaker is a hot IBD 50 growth stock as well as a self-driving leader?

Potter described GM stock as "very cheap" compared to industry peers. He sees GM as one of the least risky auto companies and named it one of his top picks.

Meanwhile, he rated Ford the cheapest auto stock but said its leadership transition has forced it to play catch-up with GM in new and emerging technologies. Still, Ford's "formidable balance sheet" and "dominant position in light trucks and vans" could fuel its mobility strategy.

And while Potter sees Tesla as "the mother-of-all disruptive auto stocks," he finds the stock expensive. Substantially all of Tesla's current value relies on cash flows that won't materialize for five years or more, he added.

This Is The Big Self-Driving Milestone We've Been Waiting For

L.A. Auto Show News: Self-Driving-Car Technology, New Models

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Read Again Why General Motors May Be The Real Deal Among 'Mobility' Companies : http://ift.tt/2y8ok7S

Let's block ads! (Why?)