GM’s Super Cruise semi-autonomous driving tech alone could account for more than half of an estimated $11 billion in connected-services revenue by 2030, analyst Adam Jonas estimates.
Jonas sees potential for a “profound narrative change in 2021” as investors realize this underappreciated growth opportunity.
“GM is offering fleet services today and appears to have big plans to grow the business,” he said. Jonas hiked his price target on GM stock to 57, up from 53, with an overweight rating. Last month, he also turned more bullish on Tesla stock, citing connected services.
Jonas’ note to clients included these highlights:
- GM’s revenue from connected cars will soar from $1.5 billion-$2 billion in 2021 to $11 billion by 2030.
- Super Cruise subscriptions will drive those gains, accounting for $6 billion by 2030. “Just like Tesla monetizes autonomy through its FSD (full self driving) product, it seems GM is ready to increase monetization of its own autonomy solution called Super Cruise,” Jonas said. On a monthly ARPU (average revenue per user) basis, he expects Super Cruise to account for $22 of a $40 total by 2030.
- Charging services will make up another 7% of connected-car revenue, and maintenance 12%, Morgan Stanley forecasts. Other services, such as streaming media, will account for the remaining 25%. Morgan Stanley does not include GM’s OnStar insurance services in its connected services revenue modeling.
- GM targets seven models with Super Cruise in 2021. That will grow to 12 models by 2023, including its higher volume full-size pickups and SUVs. The automaker already offers Super Cruise subscriptions for select vehicles today. That’s on top of an upfront cost of around $2,500 for the Super Cruise package.
Meanwhile, other electric-car rivals are pursuing autonomous driving technology too.
Chinese EV maker Nio (NIO) recently completed a secondary stock offering that raised $2.7 billion. Some of the proceeds will go toward autonomous driving research.
And Chinese rival Xpeng (XPEV) announced last month that its next-generation autonomous driving architecture will include lidar technology.
Nio stock edged up 0.1% Thursday, while Xpeng fell 3%.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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