A surprising theory is fueling a long-awaited breakthrough for General Motors Co. shares: that the stuffy century-old automaker may have some technology chops, after all.
Bullish reports from a Deutsche Bank analyst who sees a $30 billion business emerging from GM's bets on self-driving and car sharing has culminated in the stock closing at a record each day this week. Analyst Rod Lache upgraded GM to a buy last month and said this week management didn't refute his prediction that the company will spin off its mobility business.
The stock climb is a big turnabout for GM. For years, the shares were stuck in neutral as investors were smitten by Tesla Inc. as the better bet on where the industry was headed -- toward a future where plug-in cars pilot themselves between charges. Another fear was that the rise of ride hailing championed by Uber Technologies Inc. and Lyft Inc. would disrupt auto ownership and leave GM clinging to an outdated business model.
Instead, GM has been putting the pieces together to compete with those companies head-on. The automaker acquired Cruise Automation last year to develop autonomous vehicles that are now ready for mass production. And GM's car-sharing business Maven is expanding, leading the company to consider deploying automated autos through a Cruise app, via Maven, or through a partner like Lyft, which the carmaker invested in last year.
"GM's AVs will be ready for commercial deployment, without human drivers, much sooner than widely expected," Lache wrote in his report this week, adding that they could be ready within quarters, rather than years. "This will be material, even to a company of GM's size."
GM shares rose 7 cents, or 0.16 percent, to close at $43.85 in New York trading on Thursday. They've jumped about 11 percent since Sept. 22, the last trading day before Lache recommended buying the stock and raised his price target to $51, from $36. He said GM's mobility business by itself may be worth $20 a share.