General Motors Co. (NYSE: GM) stock has surged nearly 21 percent in the past three months to new multi-year highs as Wall Street has recognized GM’s favorable position in the automated vehicle business. That’s one reason why its one of U.S. News’ top stocks to buy in October.
Deutsche Bank analyst Rod Lache says GM is the market leader in automated vehicle technology, and recent conversations with GM management suggest GM may soon be targeting Uber and Lyft’s market share.
Deutsche Bank first upgraded GM stock to “buy” on Sept. 25 based on its competitive advantages in the automated vehicle market. However, after speaking to GM management over the past week, Lache now says GM’s position is even better than Deutsche Bank originally estimated.
[See: 5 Automakers to Rev Up a Long-Term Investor’s Portfolio.]
“GM confirmed that their AVs are on track for a critical milestone … they will be safely driving passengers in complex urban environments without a human backup driver within the next few quarters, well ahead of competitors,” Lache says.
GM’s automated vehicle advantages have been flying mostly under-the-radar, with rival Tesla ( TSLA) and its Autopilot technology capturing most of the headlines. However, Lache says GM has a number of advantages over Tesla as a result of its massive scale. In addition, he says GM management has confirmed they expect to beat Tesla to the punch in the driverless vehicle market.
GM management expects target rollout of its commercial automated vehicle operations starting with the largest U.S. cities. Lache says GM will be extremely aggressive in its expansion and pricing to gain market share while there is no competition in the market.
Deutsche Bank estimates GM will be able to underprice services such as Uber and Lyft by offering transportation at less than $1 per mile. Uber and Lyft currently charge $1.53 per mile, according to Deutsche Bank.
[See: 9 of the Market’s Best Growth Stocks.]
While there is plenty of market share to gain from Uber and Lyft, Lache says the long-term goal is for GM’s driverless vehicles to replace private vehicle ownership in densely populated cities.
Deutsche Bank maintains a $51 price target for GM stock.
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GM’s Driverless Uber Killer is Ahead of Schedule originally appeared on usnews.com
