GM CEO Mary Barra told Wall Street that the next generation of the company's autonomous vehicles will arrive soon.

GM is building up a big lead in the driverless area.

Potential competitors lack GM's direct access to consumer mobility.



In many ways, General Motors is still the same company that emerged from bankruptcy in 2009 and staged an IPO in 2010.

The giant carmaker got smaller, shedding underperforming brands, and focused on making its business lean, mean, and sustainable. That's meant selling it Opel division to Peugeot after owning it since the early years of the 20th century, pulling out of the Russian market, and concentrating on maximizing profits in the US and China.

None of these moves were rewarded by Wall Street. GM's stock has lagged the markets for years.

But that's suddenly changing, as the carmaker plans to launch numerous new electric cars, enter the ride-sharing market with its Maven brand, and expand its self-driving-car products through its 2016 acquisition of Cruise Automation, a San Francisco-based startup.

Wall Street likes what it sees. After GM posted yet another profitable quarter, beating expectations on Tuesday for Q3 results, it continued a pattern of surging to post-IPO-high stock prices, trading at $46, up almost 3%.

A self-driving wake-up call

The pace of GM's attack on the self-driving-car space has been a wake-up call. As CEO Mary Barra explained on a conference call with analysts after earnings were announced, "GM and Cruise Automation recently deployed our latest generation self-driving electric test vehicle."

She added. "We believe it will meet the redundancy and safety requirements necessary to operate without a driver. It is our third generation of AV technology in just 14 months."

The third-generation isn't going to be around that long, however. In response to a question from Morgan Stanley analysts Adam Jonas, Barra said that "we're working on our fourth generation, that's where our focus is right now."

The GM-Cruise deal has led to the rollout of a fully integrated autonomous electric car — the tech is being built into Chevy Bolt EVs — that's being fleet-tested in San Francisco, Detroit, and Phoenix, with New York City to follow in 2018.

Wall Street Markets Insider

This is moving the stock because GM is rapidly staking the best claim in the auto industry to the self-driving future. With the exception of Waymo, Google's autonomous division, nobody else has really moved past the first generation of driverless tech (Audi has also been making progress — its new A8 sedan is supposed to be able to drive itself in traffic jams — but GM is farther along in combining advanced driverless tech with the vehicle-assembly process).

And while Waymo has racked up millions of driverless miles, it hasn't found a way to monetize the technology, apart from setting up a small fleet of Chrysler Pacifica minivans with partner Fiat Chrysler Automobiles.

GM, by contrast, has direct access to consumer mobility. For self-driving cars, it can launch the technology via its stake in Lyft (GM has invested $500 million) or sell self-driving vehicles to Uber. If it develops the technology to the point where it can be used safely outside a fleet context, it has a vast and global network of dealers. And the company owns its manufacturing facilities, so it doesn't need to partner with anyone to put driverless technology is actual cars.

It's taken a long time and many consecutive profitable quarters, but Wall Street is finally catching up to GM's potential.