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What’s Going Right With General Motors? | The Motley Fool

In this episode of Industry Focus: Energy, Motley Fool contributor John Rosevear joins host Nick Sciple for a look at the week’s auto news. Topics include GM‘s (NYSE:GM) earnings, Argo AI’s new lidar announcement, Stellantis earnings, and more!

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This video was recorded on May 3, 2021.

Nick Sciple: Welcome to Industry Focus. I’m Nick Sciple. This week, John Rosevear joins the show to break down GM earnings, some major self-driving car news from Argo AI, and more. John, thank you for joining me.

John Rosevear: Thanks for having me, Nick. Always a pleasure to be here.

Sciple: Always great to have you. I think every time I’ve had you on this show, John, the past few months is just this idea, we’ve always got so much news to talk about an auto’s new technology and all new stuff going down the pike, more of that today.

Rosevear: I think I’ve said this before; there are days where I get up and I sit down to write and I’m like, it’s like being frozen in the spotlight because there’s just so much. What am I going to talk about first? What am I going to do first here? We have to triage it, but it can be wild sometimes. There are just so many new companies, so many new technologies all at once, like in the last year, year and a half. It’s just really quite an interesting space. Sleepy old autos, who would have thought?

Sciple: It’s interesting that you have a dynamism in the space that you probably haven’t seen, this maybe isn’t a big hyperbole a hundred years. Now you see all these companies coming into the space and all this new technological innovation all happening at once is very exciting. Let’s lead off with our first story today, General Motors reported earnings. The General Motors stock has really been on a tear this year. As of this morning, the stock is up 38% year to date up against the S&P 500, 11.5% trading near an all-time high, at least for this iteration of the business post the financial crisis. What’s going on with General Motors?

Rosevear: Well, they’re executing. I think Mary Barra, CEO, spent several years telling us, “This is where GM is going.” Now they’re going there. The whole plan is basically to rev up sales of high margin internal combustion products to fund a slew of new electric vehicles using their proprietary battery technology and a proprietary architecture that they’ve developed working with LG and some other partners, as well as self-driving via Cruise, which was a little start-up in San Francisco. They bought a few years back, which has turned into a really important subsidiary. They aren’t making money yet, but they are closer and closer to their self-driving taxi service. I think Wall Street’s finally seeing the story. I think for a lot of analysts in this space for so long, it was Tesla and that’s like, “Wait, the dinosaurs can do this too.” You’re seeing a lot of action with GM, a lot of action with Volkswagen, which is another company that’s making good moves, particularly into electric vehicles. But specifically to what happened this week, GM blew out earnings, which is interesting because they blew out the per-share profit number, but they were in line on revenue, not only with Wall Street’s estimate but what they did last year, which was not a good first quarter amid COVID-19 with factories shutting down everywhere and a lot of uncertainty.

They made a net profit of $3 billion, adjusted earnings per share was $2.25. Wall Street was looking for $1.4. That’s a very big beat. Like I said, revenue was in line. So what happened here was GM beat on profitability. They came in, their operating margin was terrific. Hang on a second and I’ll tell you exactly how terrific, 13.6%, which is huge for a mainstream automaker, absolutely huge. What happened here is ironically, it’s the semiconductor shortage that we’ve talked about for a long time. The world is short of the chips that are used for mundane tasks in automobiles, power management, things like that. This has constrained production for a lot of automakers. They’ve had to shut down this factory for a week, that one for another week, and we’ve seen it really across the industry. GM has had some of that, but GM has floated through a little better in part because they seem to have a more consistent supply from their particular supply chain than some other automakers have. There was a fire at a Renesas factory. Renesas is a chip supplier in Japan. That really hurt Ford and Honda and BMW because their suppliers are downstream of that chip factory. So they hurt GM less. But what we’re seeing with GM, like a lot of the other automakers, they’re prioritizing production of the most profitable products. There’s full-size pickups for everybody who makes full-size pickups, but also GM’s big SUVs, the big trucks, the Tahoe, the Suburban, the GMC Yukon, the Cadillac Escalade, they’re all new.

GM wants to get as many of them out there as soon as possible because if you’ve watched autos for a while, you know that new products command the highest prices, generate the biggest margins, etc. What has happened is that they’ve cut back production of things like their crossovers and sedans that are maybe a few years old at this point not commanding top price. They’ve been pushing these trucks and SUVs out there and those products generate huge margins, and that’s what their dealers have in quantity to sell right now. With auto demand booming as everybody comes outside after a year of the pandemic and says, “Man, I need a new car.” There’s a lot of that going on. At least in North America and a lot of automakers are benefiting. But that’s really what happened. GM’s product mix skewed to their more profitable products because that’s what they’re focusing on getting out the door right now amid the chip shortage. That’s what gave them the fat margin in the first quarter. Now, GM, like everybody else said, “This chip shortage thing is going to get worse in the current quarter, the second quarter.” But where some companies really reset their guidance for the full year and said, “We’re going to take a lot of damage from this.”

GM came out and reiterated what had been upbeat guidance that they’ve given us in February. Guidance ranges for a significant boost and operating profit over the last couple of years. Even said, “We’re going to be at the top end of that range because we’re really optimistic that we’re going to be able to deliver all our new products and get enough of our high-margin vehicles to dealers and all that.” That certainly didn’t hurt the stock any, with that coming out. The technology itself is moving forward. Mary Barra emphasized that none of the electric vehicles that are coming are going to be hurt by the chip shortage. The Hummer EV is still on track, the Cadillac LYRIQ, we’ve talked about, is coming next spring, which is really their model X challenger. That’s on track. The other cars that are coming, there’s a refreshed version of the bolt coming this summer, as well as a bold-based crossover. Those are on track, all of that’s on track, it’s all doing fine. Meanwhile, its self-driving subsidiary Cruise is hitting a good milestone. Wall Street people are looking at this and they’re saying, “Well, GM is executing. They’re on track, they’re positive. The bottom line is growing. They’re making the right moves as the industry transitions to electric and we’re connected vehicles and more automated vehicles, GM is right there.” That’s why the stock is up.

Sciple: They’ve told the story of the past several years of we’re going to move into some of these new technologies and you’re really starting to see that story start to come to fruition somewhat this year. One of the interesting things to your point, John, it is this idea that they reaffirm their guidance despite acknowledging that the chip shortage is going to impact their production. Is that profitability story, the mixed story you talked about earlier playing out throughout the rest of the year, or is that more efficiencies being squeezed out of the company? What do you make of that projection moving forward?

Rosevear: I think it’s all of that to varying degrees, plus a little bit of maybe they scoped out the scale of the problem earlier than everybody else because they talked about it when they gave their original full-year guidance in February, they said, “We are planning to take a hit here from the chips, but we think we’ve got it managed.” They stuck with that this past week. But yes, I think that they think they have enough to keep banging out their most profitable products, that they think they will have enough for their dealers to sell, that their new product programs are on track, their Cruise’s on track, that the electric vehicle stuff is on track. They’re finding more efficiencies. They did some of that over the last couple of years, some overt things to cut costs in North America and elsewhere and to retrench the business in search of better margins and I think some of that stuff is coming to fruition just in time. We saw a little bit of it in the second half of last year, but it’s throttled up a little more here in the first quarter and I think that’s going to carry them through the year in good shape.

Sciple: Yeah. It’s anecdotal one my closest friends is an electric vehicle engineer at General Motors and just talking to him, the workload that he’s under it’s clearly a significant priority to push these vehicles out and to accelerate their timeline, and they’re really allocating a significant amount of resources over there so it’s certainly lots of demands on the company, but they seem to be executing.

Rosevear: I mean, Mary Barra has come out and said we want to be 100% electric, plus or minus by 2035. In auto terms, that’s not that far away, that’s basically three products cycles. It’s even more like 2.5. It’s a lot and it means there’s a lot of focus right now, there are a lot of resources being made available, a lot of senior management focus, and attention, and they really want to deliver this. The unknown is still to some extent, will the customer show up for their electric vehicles? But if they deliver good products, people will buy them, I mean, we’ve seen that with other companies. Look at how the Mach-E is flying off Ford lots. Obviously, Tesla‘s had great success. If you deliver a product that people want, if it’s electric, people will buy it and GM’s betting the company on that pretty much.

Sciple: Yeah. We’ll see how that plays out. One last thing I wanted to ask you about, John, is just on valuation. I opened up introducing this section with General Motors stock, at least since the financial crisis, the company has kind of changed forms, since then. It’s at an all-time high. They are executing on some of these electric vehicle plans where there is significant investment between now and those really coming to the floor. What do you make of the stock today and its pricing?

Rosevear: Well, on the one hand, if you apply an old-school automaker multiple of around 10, 11 times earnings, that’s about where they are in terms of projected 2021 earnings and their most recent guidance. But then you think, well, what is Cruise worth? What is the electric vehicle business worth? What is this? They are investing in a whole universe of software for their connected vehicles that are coming out over the next couple of years where you will essentially have an App Store and there will be third parties that participate in that and so forth? Taking the old OnStar architecture and greatly bumping it up so that it’s delivering data at 4G speeds and so forth. What’s all that worth? The answer is, we don’t know. But if you look at the comparables in the marketplace, it’s considerably more than 10 times earnings.

Then even just factoring in the bottom-line growth, GM expects you’re going to get a fatter bottom line over the next 3-5 years, even with all of these big investments, as more of these new products come out, as they are able to command stronger margins from software-enabled products and so forth. What do I think? I don’t think it’s a screaming buy at a certain price, but if you went out, if you said I’m going to buy this and hold it for 10 years, I would not argue with you one bit. Full disclosure, I bought it at a considerably lower price and I am not selling anything. I will hold it for quite a while longer. Because I think finally after, as I said, way back at the beginning, after several years of talk, the story is really starting to happen. I think we’re going to see more upward motion in the stock over the next few years.

Sciple: Yeah. To your point on the Cruise valuation thing, it is interesting to look at. Market cap of General Motors today, $84 billion, maybe if you wanted to enterprise it a little bit higher than that. Most recent valuation for Cruise as of the middle of April, Walmart invested in the most recent round, $30 billion. So if you just want to say Cruise within GM, I mean, that’s like 40% of the stock, and again, GM isn’t 100% owner, but when you start doing the sum of the parts things can get interesting if you break it out. On this topic of autonomy, we got some other autonomy news this past week. Cruise is General Motors’ partner and they’re also working with Honda as well. Argo AI is another player in this space partnered up with Ford and Volkswagen. They announced some big news this week about a breakthrough in their Lidar technology. What does this mean for Argo AI and self-driving more broadly?

Rosevear: Well, it’s good news, but it comes with an asterisk. Basically, Argo AI, which let’s back up. Argo AI is a Pittsburgh-based company that was a start-up a few years ago, started by veterans of Waymo and of Uber’s self-driving project, which has since been shelved but was centered around Carnegie Mellon alumni in Pittsburgh, Uber was doing a lot in Pittsburgh for a while. Some of those folks came together and formed Argo AI with a lot of money originally from Ford Motor Company. Ford transferred their software people, who were working on self-driving. The software team essentially became Argo employees and part of that team subsequently, sometime later as part of a broader partnership with Ford that we’ve talked about in the past. Volkswagen made a significant investment in Argo as well and now they are, I don’t know the exact percentages, but they’re treated as equal partners more or less. Argo is building various things for both of them. There’s a self-driving taxi service, there’s a self-driving commercial delivery service that will use Ford vehicles and then a little further out, those are both coming sometime in the next year or two and then more like 2025, there is a self-driving Volkswagen that is based on, that will be based on the production version of their ID.

Buzz, which is the electric vehicle that looks like a microbus, I’m sure you’ve seen pictures of it. VW put out a lot of press photos with surfboards on top and so forth. That’ll be both a taxi and a commercial vehicle for use in Europe, autonomous. This week’s news comes down, they have a new Lidar system. This is from a company that Ford acquired a few years back. It is a proprietary Lidar system. They’re building it, I don’t know which suppliers they’re using exactly, but it’s a proprietary system, it’s not something they’re buying from one of the other Lidar companies. It’s what they called Geiger-mode Sensing. And this is an interesting breakthrough with a little bit of a complication. This is very accurate, it produces very clear pictures, very detailed images and it has longer range than just about any other Lidar system at the market that’s important for highway driving, because when you’re going faster, you need to see further forward because you’re going to be there more quickly. I mean, this is, you know, we all remember our basic physics, time, speed, distance.

This Geiger-mode system that Argo has developed with the team that they acquired is good enough for highway self-driving and that is something of a landmark. The downside of this system is that it is physically large. If you’ve seen the prototype vehicles going around for years with those big structures on the roof and the thing on top, the puck that turns around and around, well, it looks like that. The downside, it’s not going to be integrated into passenger vehicles sold at retail. The upside, that’s just fine for a self-driving taxi or a self-driving commercial van, nobody cares. This isn’t the be-all and end-all of Lidar. What it is is a system that gives them enough, they think on the Lidar front to go to market with a vehicle that can travel safely at highway speeds.

Sciple: Yeah. I think the other big thing that they made some hay about is through their partnership with Ford, and Volkswagen really developing this for mass production, and durability. One of the issues that you find with Lidar is No. 1, what John talked about earlier there’s a distance issue which just limits how fast you can go with the vehicle while remaining safe. There’s also a durability issue. You have this very sensitive piece of equipment that needs to be kept very clean, that needs to be within very narrow specifications. When you’ve got a spinning POC obviously then that can cause things where things get off-kilter. One of the things they made significant points about is the durability of the system, the ability to actually put it into a fleet and use it for extended periods of time. That’s an issue that we’ve been waiting for a breakthrough there, not only having the technical capabilities, but also being durable enough to actually work in the real world for an extended period of time.

Rosevear: There are a couple of companies, Luminar comes to mind, that are producing what they say are automotive-grade Lidar units. One of the distinguishing features of this that Argo talked up is that their system because it’s this big thing on top of the car with the […] at the top that turns, they only use one Lidar sensor. It’s a very powerful, very precise Lidar sensor, but it’s only one. That simplifies the image integration problem from a software perspective. The computer always knows what it’s seeing because it’s getting one image round and round of the 3D image of where the car is in space at any given time. It’s not trying to integrate six or 14 or eight different Lidar sensors that are scattered around the car. They say also that because of the structure of this, that’s part of how they made it more durable. For instance, it is an old-school revolving one, but it revolves fast enough somehow that rain doesn’t bother it. Raindrops getting on it, snow, a little bit of dust, whatever that doesn’t bother it. It’s able to work through that, and to keep itself relatively clean. It’s a brute force approach, but at the same time if it lasts 150,000 miles, if it works in all weather, and if it works at highway speed, it’s a breakthrough. Even if you don’t like the way it looks, the commercial customers don’t care. As long as it fits in the garage, they can maintain it.

Sciple: Right, John. You mentioned Luminar. Luminar came public just a few months back. Velodyne Lidar has also come public recently. There’s been several Lidar names coming to the market. There’s also been some rumors that Argo AI has explored the possibility of filing for an IPO coming into the future. What do you make of the state of play here in this industry? Does this news change how you’re assessing that?

Rosevear: No, because there’s still plenty of markets. I think what Argo told us is they’re not buying an off-the-shelf solution. They’ve got one that works just fine for their near-term purposes, say over the next four or five years. I think they expect to develop something better in-house over the next few years if nothing else, maybe it’ll look prettier. At the same time there’s still companies, Ouster is one that’s more recently public that is not a start-up, it’s an existing business. They’ve been selling Lidar units in some quantities for various industrial uses for a few years. They’ve got a little more experience in the bank on how to make a durable unit because of that. I think Ouster is still a few years away from full-blown self-driving car level stuff, but they’re fairly close. Luminar has moved very aggressively with automotive-grade technology. Their thing is durability. Velodyne was one of the earlier pioneers in the space. At one time, Ford was an investor, I believe they have exited after the IPO. Velodyne is doing less in autos right now, and more in industrial things.

There are a lot of things you can use Lidar for, where you don’t require automotive durability or range. A little robot that cleans out the ducts throughout your building. The Lidar helps it navigate, those kinds of little things. Those are real commercial applications for which there are markets, and to varying degrees, these companies probably not so much Luminar, but certainly Velodyne, and possibly Ouster as well are doing things like that. There are hundreds and hundreds more, but that was just an example. Things where you do need a Lidar image, but you need it on a factory floor. You don’t need it on a highway where traffic’s doing 75 in slush, which is a very different problem. There’s plenty of markets for this.

As robotics become more advanced, as more and more hardware gets automated, there’s a big market for Lidar. I wouldn’t presume to tell you how big it’s going to be in 2030. I think anybody doing that is mostly making wild guesses. Certainly where we’re focused or where I’m focused day-to-day in automotive, Ouster is interesting, Luminar is interesting, and it is also interesting that a company like Argo has acqui-hired a team to develop this thing for them in-house. Waymo has its own proprietary Lidar system, which is a solid state. One of the virtues that I understand is that it’s relatively inexpensive, but they need a bunch of units per car to make it work. There’s a lot going on in this space. I think a couple of the public companies that we’ve seen rise up will be winners beyond the names we’ve talked about here. I think it’s still very much a forming market. If you want a profit here, it might be one of those times where you take small positions in the three or four leading ones, and see where they go over the next year, and then refine from there. Certainly it’s an exciting industry, and it’s going to be a growth industry. We know that, we just don’t know who’s going to benefit from the growth yet.

Sciple: Yes, certainly. My advice to folks would be when you see three, four, five companies come public all on the course of a year in one space that tends to say things are a little frothy. While I do think that there’s probably going to be increasing demand for this type of technology in the future, I would also imagine that people may not be as enthusiastic about the space in general a year from now than they are today, just given the way the hype cycle works, and things like that. Lidar is really a tool that allows a piece of equipment to know exactly where it is located in the world. Now the most public, and highest-profile application of that today is self-driving cars. They need to know where all the other cars are, and be able to know exactly where they are in physical space, and they probably have the highest specifications needed to actually make the technology work but that same Lidar application, any place where you have a machine that needs to know where it’s located in the world with a very high level of fidelity that technology can plug in.

Rosevear: We should probably just explain. Lidar uses an invisible laser to create a 3D map of everything around it. That’s what it does. With a self-driving car, what you do is you have at level 4, as we say, which is where the car is limited to where it can go. Usually the limit is that the car has been supplied with a highly precise 3D map of the area it’s going to be operating in. Then several times a second, the Lidar scans, and it compares itself with this map. So it knows where it is within a centimeter or two, which may sound like overkill for a car, but at the same time, think about parallel parking, things like that. You want to be able to do that right. You want to know when to open the door, that kind of thing. That’s what the technology is. When we talk about level 4, it’s using the Lidar plus a map for that as a built-in suspenders approach to things like GPS so that the car knows exactly where it is with a lot of reliability, and some fail-safe capability.

Sciple: Simple explanation for Lidar is a lot of people know what radio or what radar is, like planes use. You shoot out radio waves, they bounce back and they give you a location of an object out somewhere in space. Well, Lidar is that, except it’s light detection and ranging. You replace radio waves with light waves, boom, you get Lidar. Lidar is obviously higher fidelity because nothing goes faster than the speed of light. Nothing can pack more data in particular, packet, et cetera. It’s radar, but you’re using light waves instead of radio waves. One last story, John, I wanted to talk about before we move on as far as companies adopting technology and just evolution of the auto industry is Stellantis (NYSE:STLA) reported earnings earlier this week. This is the company formed by the merger between Fiat Chrysler, and Peugeot. What are some takeaways from these earnings?

Rosevear: Well, first of all, they’re a brand new company. The merger was finalized I think on January 16th. They really don’t even have a full quarter. Second, the thing to know if you are thinking of investing in Stellantis or comparing it with other automakers is that they are going to follow the practice that is common in some European countries of reporting full financial semi-annually rather than quarterly. They did not tell us how much money they made in the first quarter. They did, however, give us a detailed business update. They told us what their revenue was, they told us what their sales were. They gave us some guidance for the full year. They told us they were on track for operating margin. I think it was between 5.5%-7.5%, something like that. Basically gave us the basic state of play, but we don’t expect a full financial thing from them until early August.

They said when they will report their first-half earnings in what should be considerable detail by the European Union standard. One of the interesting things that came out of this was a headline for some folks. Fiat Chrysler had been a big purchaser of emissions credits from Tesla. This was a significant source of revenue for Tesla. In, I think six of the last seven or eight quarters, it has been the difference between profitability and a loss, these credit sales they get. They get credits from the State of California, they get credits in China, and they get credits from the European Union for sales of electric vehicles that they can sell to other automakers that aren’t selling a large enough percentage of electrified vehicles to meet the standards which get tighter and tighter every year or two. […] at Chrysler with its truck and muscle car line-up [laughs] was buying a lot of those credits, mostly so they can sell jeeps in Europe. That was largely what they were doing. They fee out small cars, that is, their other principal European lines aren’t so much on the emissions, but the jeeps were thirstier and they needed to buy credits from Tesla to set that off. The other side of Stellantis is PSA, which is the parent company of Peugeot, and Citroen, and they also own Opel, which they bought from GM a few years ago, a number of European brands. They have plug-in hybrids, they have some electric vehicles. They’re further ahead on that because they’re based in France, their home base is Europe, they’ve had, more pressure, both market pressure and regulatory pressure than perhaps we have seen in the United States until recently.

Anyway, with this merger, the upshot is they don’t need the European credits anymore. This is something like $320 million that Stellantis is not going to be paying to Tesla now for these credits that had been part of the deal. I don’t know if there’s going to be some financial settlement or what. I also don’t know how this affects the credits that Fiat Chrysler was buying in the United States to offset those Ram pickups, and jeeps, and dodge chargers, and all that stuff. I don’t know how that’s going to play out yet, but it was a noteworthy development because if you’ve been watching Tesla and you’ve been, “Yay, Tesla profitability,” and then look deeper and see, “Without these credits they ran another loss.” They’re running operating losses, etc. These are going to start to go away. Stellantis might be the first customer backing out in one particular region, but Volkswagen said in its earnings report this morning, “We don’t think we’re going to be buying credits from Tesla for more than another couple of years because we’re going to be selling enough electric vehicles in this huge EV program they’re ramping up around the world, then we’re not going to need to. We will meet all the goals on our own.” If you’re a Tesla watcher, have that in your head. I’m sure Elon Musk and his team do. They’ve got to boost their automotive margins or find some margin elsewhere in order to make up for that help over the next several quarters. They’ve got to really be thinking about that, but it was a milestone. Tesla is of course 100% electric, so they have lots and lots of credits to sell to these other automakers that are building up their capabilities and now Stellantis says, “We don’t need them anymore.”

Sciple: It’s telling too because Fiat Chrysler of the major automakers had been and probably the most reluctant to invest in cleaning up their fleet, had a very much focused on selling the highest margin vehicles they could in the form of the trucks, and the jeeps, and things such as that.

Rosevear: To be fair, they had a lot of cleaning of their balance sheet to do and that was always their plan. They came out of the economic crisis with a ton and a half of debt and they have paid that down. But that was why they weren’t investing in EVs.

Sciple: Exactly. But with this merger with Peugeot, one of the clear motivators behind that, and they tried to go after Renault previously and that didn’t work out. But one of the big motivators was we want to get our fleet more clean into our fleet in order to comply with these European regulations. You’ve seen automakers across the world taking steps and maybe it’s not acquiring a company, but rolling out products all with the goal of not having to either pay fines to the government or purchase regulatory credits. What we’ve seen in Stellantis this week is just the first example of a company that has taken those steps that now sees a path to no longer having to buy these credits. I think we’re going to see more and more of this moving forward. You’ve seen the automakers put their chips down as far as constructing more electric vehicles. We’re really starting to see this industry mature and meaningful competition come out there between Tesla and many of these other players. It’ll be interesting to see how things continue to play out. We always knew eventually we would get to this space where there will be many players trying to offer electric vehicles and now it looks as though we’re getting there, and it’s an exciting time.

Rosevear: I think in 2011 or so when Tesla went public, we all thought it was going to be like 2018, but here we are. It is finally happening thanks to sales nudges. Tesla’s gotten big enough that the other automakers need to keep an eye on it, regulatory nudges in China certainly, and in Europe, and now perhaps coming in the United States with Biden. Yes, it is happening. These products are real, no more talk of vaporware. There was a Twitter wag saying, “The Ford Mustang Mach-E is vaporware. It’s not real.” Well, they’re shipping and people have driven them and they’re like, “Well, actually this thing’s pretty nice.” [A lot more of that coming. That’s just the tip of the iceberg.

Sciple: Maybe the last question for you, John. Lots of things going on in the auto industry, lots of change taking place, what are you paying attention to? What are the things that you’re focusing on right now?

Rosevear: Near term, the chip shortage, but not just the chip shortage. I want to keep hearing that everybody’s electric vehicles are on track. Another thing we’re watching is the real state of play and self-driving. I think again, going back a few years, we all thought we’d have some self-driving taxis by now. GM had been talking about launching by the end of 2019 and then sometime in 2020 and now they’re saying, “No, we’re not giving any more dates. We’re just going to when it’s ready.” There’s been a lot of that in the industry. As people have realized that maybe this is a harder problem than we thought. Waymo’s well-regarded CEO John Krosnick left the company a couple months ago. Nobody said why. It doesn’t seem to be a scandal, but having met John and knowing him a tiny bit, I wonder if the go-to-market plan was being pushed beyond what he wanted to sit and wait for. That is just speculation on my part. I have not talked to him in a long time. But this has turned out to be a lot harder of a problem, but it is something I’m going to be paying attention to because there will be breakthroughs coming along. Also, looking at the battery space, we all know lithium ion batteries as used in electric vehicles today are not the greatest technology. They’re heavy, they’re clunky, they’re temperature sensitive. If the car catches on fire, they make boy, do they make a big fire? [laughs] Because they burn and burn as we’ve seen firefighters putting Teslas and giant water tanks to try and put fires out and so forth. That space is moving forward.

We’ve seen some indications that solid-state batteries are getting closer to the market sometime perhaps by the middle of the decade. That’s going to be another important thing that will make electric cars lighter, safer, cheaper, and more reliable all at once. That will be good and maybe even longer range too, longer-range per dollar anyway. These are the things I’m going to be watching. It’s not so much about who’s going to have the hot SUV next year, which is what we might’ve been talking about 10 years ago as who is where in the various technology races or maybe pushes is a better word because I don’t think in any of this there’s a big reward for being a little ahead of somebody else. You’ve got to get there, you’ve got to get to the point where you have a fleet of electric vehicles, you’ve got to get to a point where you are doing more advanced driver assist systems, if not full-blown self-driving in your retail products. There’s more of this coming. Those are the things we watch. The state of play in the various technological upheavals that are going on in the industry and there are a whole bunch of them right now.

Sciple: We’ll continue to watch it, John, and I look forward to having you on in the future as we have more things to discuss.

Rosevear: All right. Thank you, Nick.

Sciple: As always, people on the program may own companies discussed on the show and The Motley Fool may have formal recommendations for or against the stocks discussed, so don’t buy or sell anything based solely on what you hear. Thanks to Tim Sparks for mixing the show. For John Rosevear, I’m Nick Sciple, thanks for listening and Fool on.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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