were down on Friday after the abrupt departure of longtime company executive Dan Ammann.
Ammann, until Thursday, headed GM’s self-driving car division, Cruise Automation.
GM stocks (ticker: GM) fell about 3% in pre-market trading.
Dow Jones Industrial Average
futures contracts fell 0.6% and 0.3%, respectively.
The departure was announced in a brief press release on Thursday. And it was a surprise as the initial reaction of the stocks shows. Ammann featured prominently at the company’s investor day on October 6. At that event, GM laid out plans to generate roughly $ 50 billion in annual revenue by 2030 from robotaxi-type companies. This is essentially what Ammann was responsible for.
Amman had been CEO of Cruise since 2019. Prior to that, he was President of GM and served as CFO.
Going forward, Kyle Vogt, President and CTO of Cruise, will assume the role of interim CEO. He is also the co-founder of Cruise. GM bought Cruise in 2016. He was on the recent GM Investor Day, but investors will want to learn more about Vogt in the coming months.
Until that happens, investors will be wondering what Ammann’s departure means for Cruise and the state of the business. Cruise tested fully autonomous vehicles in San Francisco. Vehicle testing and development, of course, are key steps on the road to bringing the robotaxi to market. The next challenge for Cruise will be to evolve its technology and spread the robotic axis across the country.
Cruising vehicles are not like the vehicles consumers can buy to manage speed and lane keeping on a freeway. They cost hundreds of thousands of dollars, which is why then you need a robotaxe – generating income – to justify the expense.
Friday’s drop is eating away at some of GM’s good stock returns in 2021. Heading into Friday’s trading, GM shares have risen about 40% year-to-date.
It’s hard to say how much is in stock for autonomous driving. Car sales and automaker profits rebounded in 2021. Additionally, GM shares are trading for only 8.5 times estimated earnings in 2022. The S&P 500 is trading about 21 times. It’s a good deal if GM ends up with a $ 50 billion robotaxi business in 2030, along with its existing auto and auto finance business.
Write to Al Root at firstname.lastname@example.org