General Motors Company (NYSE:GM) has announced that in two years it could unveil driverless cars for the ride-hailing market with a view to competing with the likes of Lyft and Uber as the automaker pushes to remain relevant in an industry that is changing fast. According to General Motors, the robot taxis will hit the streets in 2019. The robot taxis, mostly Chevy Bolts, are being produced by a subsidiary of the auto giant, Cruise Automation. No human drivers will be present in the vehicles for backup purposes.
Per Dan Ammann, the president of General Motors, the car maker is counting on advancements in driverless vehicle technologies, cost reductions as well as growth in ride-hailing services to be able to successfully launch a robot taxi in two years’ time. By 2021 the automaker also intends to launch an electric vehicle platform that will be profitable.
Economies of scale
“For GM to get the benefit they’re looking for, they need these cars on the road at scale as soon as possible. With ride-hailing services, consumers are saved from sticker shock of how much an EV costs…” Sam Abuelsamid, an analyst at Navigant Research,said.
Areas where the robot taxis are likely to be deployed were not specifically disclosed and General Motors only said they will be launched in dense urban environments. Currently the automaker is testing out its driverless car technology in Scottsdale, Arizona and Warren, San Francisco.
Last year General Motors invested $0.5 billion in Lyft and has indicated that it has figured out how to cut the cost of ride-hailing services to less than $1 per mile by 2025. This will inevitably increase the usage of ride-hailing services by consumers and this will also enable the operators to achieve profitability.
The development will pit General Motors against Waymo which is expected to deploy robo-taxis in Phoenix, Arizona. Waymo is not manufacturing its cars but is instead may be using Fiat Chrysler Automobiles NV (NYSE: FCAU) Chrysler Pacifica minivans. GM’s rival, Ford Motor Company (NYSE:F), is expected to launch its first fully driverless car in 2021 and the Dearborn, Michigan-based car maker is likely to roll out a mobility service too.
On Friday shares of General Motors Company fell by 0.65% to close the day at $42.79.