Mike Ableson, GM vice president of strategy and global portfolio planning, details the auto giant's pivot to new tech.
(TNS) -- General Motors is on an acquisition and investment spree unlike anything since Roger Smith’s purchases of EDS and Hughes Aircraft in the 1980s.
Mike Ableson, GM vice president of strategy and global portfolio planning, is responsible for finding the partners and younger companies that can accelerate autonomous vehicle technology and strengthen GM in an emerging market for alternative mobility.
From the $500 million investment in ride-hailing service Lyft and the pending acquisition of autonomous vehicle technology firm Cruise Automation to launching the Maven car-sharing network, GM is moving to maximize its chances to lead rather than chase when it comes to the new ways we will get around, Ableson said.
The Detroit Free Press recently interviewed him about the potential pitfalls and potential profits of autonomous vehicle technology, vehicle-to-vehicle connectivity, ride-hailing and car-sharing. The technology and business alliances are moving at a head-spinning pace.
Earlier the month, the Cruise Automation deal was temporarily sidetracked by a pair of dueling lawsuits between Kyle Vogt, co-founder and CEO of the San Francisco startup, and a past associate who claims he was a founding partner and is owed a portion of the purchase price, which some media outlets have reported to be more than $1 billion.
Q: What does Cruise give you that GM doesn’t have from its vast ranks of engineers, scientists and information technology workers?
A: They pull in very talented people, especially in the software space, that are arguably the best in the world. This isn’t the first company that Kyle (Vogt) has started. So he has a reputation of being very successful. The challenge of autonomous driving and the impact it could have makes it a really interesting area for the smartest software folks out there.
We have quite a few experts, and we spent time reviewing what Cruise had done … versus what it would have taken us to develop internally. With Cruise we’ve got these very smart software folks, while on our side you’ve got General Motors and all our relationships with suppliers, regulatory agencies and everything else. The combination is very powerful.
Q: When GM made multibillion-dollar acquisitions in the 1980s, the cultures didn’t integrate very well. How and why will these new ventures be different from what happened with EDS and Hughes?
A: One of the differences is just the scale. Those companies were large when GM bought them. Cruise has about 40 employees, although they’re hiring more. We’re leaving them in place, in their offices in San Francisco, in part because it gives them a little bit of isolation from the enormous organization here. What they want to do most is work as hard as they can, as fast as they can, to solve these technical challenges.
The Cruise people will report up through Doug Parks (GM vice president for autonomous technology and vehicle execution). It’s not our intent that we’re going to move those people and drop them into Warren (a Detroit suburb) in the middle of the tech center.
Q: So does GM have a timetable for delivering its first fully autonomous vehicles for sale to consumers or fleet customers?
A: Getting some vehicles out there that still have drivers in them, that’s going to be something that happens in the next few years, but that’s with drivers. Then you’ve got to see how it develops from there and when do we reach a point where we say, ‘Yes it’s ready to go driverless.’ That’s going to take some time to accumulate the experience. There’s work to do with the regulators as well to make sure we’re all agreed on how we can do this very safely.
Q: In the ride-hailing area, why did you choose to invest in Lyft, when they are substantially smaller than Uber?
A: We wanted to pair up with a company with whom we shared a vision of the future. When we started talking to John Zimmer and Logan Green (the co-founders of Lyft) they could see that autonomous transportation will have a fundamental impact on their business. On our side, we could see that (ride-hailing) was potentially a very good way to introduce autonomous technology.
(GM CEO) Mary Barra makes a point that if we’re going to team up with somebody we need to team up with people that think of the future and share some of our core values. With the Lyft people, that was very true.
It’s still early, but there’s been a lot of work back and forth.
Q: Unlike some of the newer players in the new mobility space, your shareholders expect a significant return on GM’s investments pretty quickly. How to you balance that financial reality against the risks other companies can take without negative effects on their stock price?
A: Our core business of selling great vehicles to individuals is going to remain the vast majority of our business for many, many years. If you look at where we’re strong as a company, the cities where (ride-hailing) is most appealing in is not necessarily where our strength is today.
We have this advantage of a very strong core business. We’re taking advantage of that in a way to make sure we’re prepared for the future. I don’t feel like we’re putting our shareholders at risk compared to if this were our only business and we’re arguing that we’re going to grow revenue and profitability from nothing.
Q: How do you quantify the cost if you did not move into these new areas where the core relationship with your customer will be very different?
A: It’s hard to quantify because you’re trying to predict the future, which is always uncertain. You can look across an array of new technologies and would argue that by the time you can calculate the cost of not being in it you’re probably too late.
I think it’s absolutely inescapable that autonomous will change our industry. You can argue about exactly when it will happen. But you’re fundamentally changing the way our customers interact with our vehicles in a way that hasn’t happened since the industry started more than 100 years ago.
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