If You're Wondering Why Automakers Can't Stop Talking About Mobility, Wonder No More

Matt Posky
by Matt Posky

“Mobility” is easily the most overused term in today’s automotive vernacular. Despite being incredibly nonspecific, executives can’t help but make it the bookend of most speeches involving long-term goals and production stratagems. But why?

The term itself pertains more to the industry itself than the specific products it’s developing. While “mobility” can be applied to any conveyance with a technological bent, the word also represents a company’s ability to move into other areas of business. And that’s what gets the investors and market analysts tugging at their collective collar, damp across the brow, so red hot they can’t help but raise the stock valuation of any company that seems poised to make a big move.

Tesla’s entry as novel manufacturer with a unique product was enough to send its share price through the roof, and established automakers took notice. Despite Mark Fields’ best attempt to rebrand Ford as a tech company, he couldn’t bottle that same lightning and paid the ultimate price — getting fired. However, General Motors may be succeeding where Ford initially failed. The proof of the pudding is how high its share prices continue to climb.

Increasing by 17 percent in the past month alone, GM’s share price is now higher than ever. The largest contributing factor has everything to do with the mobility angle. Chevrolet has released a well-received electric vehicle, Cadillac has unveiled its semi-autonomous Super Cruise system, and Maven is coming at ride-sharing from all angles. Add in General Motors’ ambitious test fleet of self-driving electric cars and you’ve got a recipe that’s causing investment analysts to double over with erotic pleasure.

They love this sort of thing. So much so that there seems to be an underlying phobia on Wall Street that traditional automotive manufacturing might die out if companies don’t branch out into other arenas.

“Investors and the startups in Silicon Valley assume that GM and the other car companies are dinosaurs and it’s just not true,” Morningstar Inc. analyst David Whiston told Bloomberg. “It’s not like they just started working on autonomous cars because of Tesla.”

However, the attitude that tech companies will pave the way to autonomous technologies is changing. Automakers have a huge advantage here. They know the hardware better than anyone and possess the means to procure the missing technology necessary to bridge the gap, then test it relentlessly.

As a result, investors have begun betting that General Motors and its ilk will probably be the first groups to effectively field self-driving cars. Ford is also preparing an autonomous fleet for taxi and delivery services and, after a news spree in August, its share price also crept upward for the first time in a while. But the big money is still on GM, according to Bloomberg. Investors the world over are hyping up GM as the next big thing on Wall Street.

“Traditional automakers, and GM especially, are fundamentally better businesses today than they have been in the past,” wrote Barclays analyst Brian Johnson in a note to clients. “Whereas previously investors viewed GM as a dying dinosaur, investor attitude seems to be rotating that GM is instead an evolving mammal.”

Johnson raised his price target for General Motors’ shares from $41 to $55. Still, on a longer timeline, some investors are prepared to speculate much higher than that. Earlier this month, Citi’s Itay Michaeli claimed the automaker could climb as high as $134 per share — attributing some of that valuation to a hypothetical robotic taxicab business GM doesn’t currently possess. Analysts have suggested spinning off that not-yet-real company would be worth an estimated $30 billion.

So, if you were hoping this mobility talk would die out, you’re in for some disappointment. Investors still absolutely love the tech industry and the more tech-focused and diversified automakers become, all the better for their share price.

Enthusiasts may look at the finished products and wonder if it’s too complicated, too expensive, and not-yet proven. But investors won’t. They’ll catch a whiff of circuit board, hear someone say “mobility,” and recommend buying — leaving automakers with little recourse but to press aggressively onward.

[Image: General Motors]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Lorenzo Lorenzo on Oct 24, 2017

    I'm still convinced that FCA has a chance to survive, or last longer than expected, because it doesn't have the billion$ other car makers will be throwing at "mobility" and electric cars, and will have to stick with the lowly internal combustion engine and traditional vehicles.

    • See 1 previous
    • Geozinger Geozinger on Oct 24, 2017

      @JohnTaurus I think FCA is doing autonomous cars the right way, leveraging a partnership with companies where that is their mission. FCA builds the cars, vans or pods, Waymo does the rest. Not a bad idea, actually.

  • Turf3 Turf3 on Oct 24, 2017

    Please note that "technology" is not a synonym for "computer software". All of the following are technologies: Vapor-compression refrigeration systems Ackerman steering Hydraulically actuated automatic planetary gear transmissions Deep drawing of high strength steel body panels Nodular cast iron crankshafts Front and rear crush zones for crash safety Radial tires Catalytic converters High strength high integrity die castings of light metals Fiber-reinforced plastic suspension springs Selective placement of laminar and turbulent flow patterns and the transition between these regimes for minimum aerodynamic drag Etc Etc Etc.

  • Joe This is called a man in the middle attack and has been around for years. You can fall for this in a Starbucks as easily as when you’re charging your car. Nothing new here…
  • AZFelix Hilux technical, preferably with a swivel mount.
  • ToolGuy This is the kind of thing you get when you give people faster internet.
  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
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