Goldman Sachs Expands Interests Into Automotive Tech
Goldman Sachs is creating a joint venture that will help it capitalize on automotive technology firms while they’re consistently being overvalued on the New York Stock Exchange. Automotive startups have become a hot item, so long as they’re trading on the assumed merits of new technologies, and there’s no shortage of new companies being propped up by established players. The last few years have been a merry-go-round of establishment automakers and financial intuitions investing in startups on the off chance they might have something useful.
Meanwhile, burgeoning electric vehicle companies are using special purpose acquisition firms (aka blank-check companies) to maximize their advantage. Even though some have argued this is being done unfairly, there’s not much accountability in general. The iron could not be more primed for striking if you happen to be one of America’s largest banks.
The venture formalizes a partnership between Goldman’s industrial and technology, media and telecommunications teams that had been collaborating already on deals for years, David Friedland, head of the Americas cross-markets group, said in an interview.
“It will lead to greater collaboration, greater dedication of resources, more efficient execution on opportunities and more internal institutional support,” Friedland said.
Goldman Sachs’ strategy appears similar to the Softbank Vision Fund that has been on a technology buying spree with a clear aim to control certain technologies in the near future. The fund makes strategic investments in companies across the technology sector, with a focus on artificial intelligence, applications, and devices that use sensors to network with other devices or the internet (e.g. smartphones, tablets, home assistants, wearable fitness devices, robots, modern cars). Some of Softbank’s biggest investments have been in the automotive realm and it has become increasingly close with Toyota. The financial entity has a clear interest in buying up businesses pertaining to food delivery, freight and parcel services, online vehicle sales, car sharing, and autonomous technologies.
While Goldman Sachs may have different objectives, seeing another gargantuan financial institution take a similarly strong interest in automobiles makes you wonder. The bank may just be trying to secure investments in a period where technology startups are guaranteed money makers on Wall Street, especially once they’re supported by larger entities. But there’s also a sense that it would like to take control of various business sectors before their respective markets reach maturity.
“After Tesla’s IPO many people believed that it’s lightning in a bottle and it will not happen again because of the capital needs,” Buddin said. “The way that Tesla has grown and is valued gives people faith that there’s room for startups to grow in this sector.”
[Image: Goldman Sachs]
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- Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
- Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
- Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
- William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
- Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
Goldman Sachs and Blackstone, the epitomes of good old-fashioned greed. If there's a nickel to be squeezed out of anyone anywhere, these guys will be right there promoting whatever it is that'll make them some money. Right now EV stocks are where the punters are "investing". Soon all their money will be ours is the Goldman Sachs outlook. On a country level, they pulled it off on Greece. Wonderful company.
Goldman Sachs funds the politicians who will outlaw human-driven and fossil-fuel-powered cars, thus creating the demand that will make their investments profitable.