Photo by John F. Martin for GM
While at times controversial, each of these decisions brought GM closer to where it is now: ready to grow into new markets.
Barra’s CEO is very different from the one she inherited from the financial crisis. Leveraging its core business, GM targets trillions in future markets that go far beyond the sale of cars and trucks.
“This is just the start for the next generation of General Motors,” Barra told investors Wednesday during GM’s first quarter earnings call. “We are well on track with our plans to transform our business and lead the industry into the future. “
GM’s global growth and innovation team is leading much of the expansion. New businesses for the team include electric utility vehicles, auto insurance, military defense, and the expansion of its OnStar brand services connected with other new businesses along the way.
1,3 billion de dollars
The Detroit automaker’s innovation division has identified $ 1.3 trillion in new market opportunities that it says compliment its core business and that it has a right to “win,” executives told CNBC. That doesn’t include GM’s majority-owned autonomous vehicle unit, Cruise, which could represent an $ 8 trillion market in the future, or urban air mobility, which it says will be a market of more than $ 8 trillion in the future. $ 1 trillion.
Expansion plans, if successful, would change the way the company makes money and could help temper boom and bust cycles in the auto industry. GM would depend more on recurring revenue from software and services than just the production and sale of vehicles.
GM’s innovation team has about 20 initiatives in its pipeline that target $ 1.3 trillion in potential new markets, according to Alan Wexler, GM’s senior vice president of innovation and growth.
Wexler said the team is evaluating urban air mobility, think flying cars and taxis, for the mid-2030s, as well as more sustainable businesses like recycling electric vehicle batteries for use as power generators. .
Screenshot via GM
“I think the most exciting thing and the reason I’m here is that we are creating a business that doesn’t exist in the world, and frankly we are creating an industry that doesn’t exist in the world and we ‘you do it for the good of the inhabitants of the planet, ”he said in a video interview.
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So far, the innovation division has launched a Military Defense Unit, a new commercial electric vehicle company called BrightDrop, and extended GM’s decades-old OnStar connectivity brand to insurance services, vehicle logistics and security.
“What we’re focusing on here is setting the context for everything we do,” Wexler said. “We’re not looking at the side view or the rearview mirror, if I can use an automobile analogy. We are really looking to the future. “
Barra told investors this week that GM remains fully committed to investing in its new business as well as electric vehicles despite the coronavirus pandemic and a continuing global shortage of semiconductor chips.
“The challenges we currently have with semiconductors are a temporary situation,” she said. “We’re going to work through this and go beyond, and it doesn’t impact our transformation and growth strategy. “
Barra’s intentions to reinvent the company largely began publicly in 2017, when the company acquired Cruise and launched mobility initiatives such as its now defunct Maven mobility brand. It did so while significantly reducing its business activities, including leaving Europe, Russia and other markets.
This willingness to “win” is a guiding principle with the company’s “triple zero” vision to eliminate collisions, emissions and traffic jams with products developed by its innovation team, according to Fletcher.
“We always want to do it faster, but I think we have a lot of good things in motion, and that’s going to be a game-changer for people,” she said.
” A lot of advantages “
“I like all the verticals they pursue,” Morningstar analyst David Whiston told CNBC. “I don’t think these are frivolous science projects or anything like that. “
He said that many companies could have “a lot of advantages” that are probably not reflected in their actions because it is early and not sure how bad they could become.
In an investor note, Jonas called the companies “hidden gems,” including some more traditional business operations such as Corvette, Cadillac and its financial arm.
Bank of America Global Research analyst John Murphy described the new business units, particularly BrightDrop, as proof that GM “has cutting edge technology in-house to compete” with PSPCs in a note earlier this year. He told investors the news verticals could be “segregated and monetized over time.”
GM’s inventory has grown over 160% in the past year. Shares are above $ 57, up about 38% so far this year. Its market capitalization is approximately $ 84 billion. Barra said on Wednesday the company will host a meeting this fall focused on its futuristic growth initiatives.
“We will use this event to deepen our growth strategy and financial opportunities and everything that drives them, including software, hardware and services, as well as our strong brands,” said Barra.
– CNBC Michael Bloom contributed to this report.