DEUTSCHE BANK: GM could release a self driving car 'much sooner than expected' (GM)

GM self-driving bolt

General Motors' shares jumped 4.56% on Monday after an analyst said the company could release a self-driving car much sooner than previously expected.

"General Motors' autonomous vehicles will be ready for commercial deployment, without human drivers, much sooner than widely expected (within quarters, not years), Rod Lache, an analyst at Deutsche Bank said in an Oct. 1 note to clients.

Lache also noted that businesses built off GM's mobility platform "will ramp much faster than is widely expected," and is a good candidate for a spinoff that could attract growth-seeking investors. Lache based his predictions on conversations with GM executives, who seem confident in their product, he said.

This prediction is surprising, and would likely put GM as the first company to market with a fully autonomous vehicle. Tesla's cars currently offer a sort-of advanced cruise control, but Lache said that GM's upcoming vehicle could be fully autonomous in "complex urban environments without a human backup driver."

The company is close to this major milestone thanks to its strong artificial intelligence foundation, gained through an acquisition of Cruise Automation as well as the development of GM's in-house capabilities.

If Lache's prediction is correct about the soon to come release of the autonomous vehicle, GM could leverage its manufacturing prowess to enhance its first-mover advantage. Lache said company executives agreed with his prediction for a large scale commercial operation by 2020.

While the company could sell their autonomous cars to individual consumers, Lache said GM is working on its own ride-hailing service that would utilize the new vehicles. The service could be highly disruptive to Uber and Lyft, and could lead to a natural monopoly in major cities according to Lache.

The autonomous cars would be electric, which extends the lifespan of the cars significantly. Lache predicted a lifespan of about 210,000 miles for the new vehicles but revised his estimate to 400,000-1,000,000 miles after talking with GM executives. This would translate to cost savings in a future ride-hailing service, as maintenance costs would be lower for than traditional gasoline-powered vehicles.

Eventually, the growth potential of the new vehicles and associated services would be a good fit for a spin-off company Lache said. The move would unlock value for GM's shareholders and would allow investors attracted to the growth potential of the new company to invest more easily in the company.

"We are seeking to avoid hyperbole in discussing the implications for GM’s stock. But clearly, the opportunity is very large," Lache wrote. He rates the company a Buy with a price target of $51.00.

GM has risen 20.64% this year.