There’s a leader emerging in the autonomous vehicle market, and it may surprise auto investors. In a new note on Monday, Deutsche Bank analyst Rod Lache upgraded General Motors Co. (NYSE: GM) stock to “buy” and said GM is positioned to beat its driverless vehicle competitors to the market.
According to Lache, GM could be ready to deploy fully autonomous vehicles within the next six quarters.
“Investors may be surprised that GM may be in the lead,” he says. “GM’s AVs will be ready for commercial deployment, without human drivers, much sooner than widely expected (within quarters, not years), and potentially years ahead of competitors.”
[See: 10 Ways to Invest in Driverless Cars.]
With a forward price-earnings ratio under 7, GM stock currently trades at one of the lowest earnings multiples in the entire Standard & Poor’s 500 index. Lache says GM management could choose to spin off its driverless vehicle unit to ensure its growth potential is fully valued in the market.
Lache’s comments on GM’s surprisingly advanced driverless vehicle technology come less than a week after Bernstein analyst Max Warburton criticized GM rival Tesla ( TSLA) and its Autopilot 2.0 technology.
“While Tesla has many advantages, we believe its self-driving capabilities are exaggerated,” Warburton wrote.
Warburton says Tesla’s true advantage over rivals is marketing. However, Lache says GM’s massive scale gives it a major advantage in getting autonomous vehicles to market.
GM was also the first automaker to bring an affordable, long-distance, fully electric vehicle to market when it began delivering its Chevy Bolt EV in December 2016. Tesla began delivering its Model 3 in July 2017. However, due to Tesla’s relatively small production capacity, new Model 3 orders still take up to 18 months to be delivered, according to the company.
Lache says GM’s Mobility segment could be worth roughly $30 billion, or $20 per GM share, if the company chooses to spin it off in the future.
[See: The 10 Most Valuable Auto Companies in the World.]
In addition to the upgrade, Deutsche Bank has also raised its price target for GM stock to $51.
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General Motors Company (GM) May Win Driverless Vehicle Race originally appeared on usnews.com
