GM to expand revenue sources beyond cars and trucks

GM is looking for new enterprises to expand its sources of revenue beyond vehicle sales and is incubating ventures from vehicle insurance to commercial delivery services to be involved in future markets worth an estimated $1.3 trillion.

That doesn’t include flying cars, a market sector that alone could be worth $1.3 trillion.

GM Chief Executive Mary Barra’s effort goal is to make GM a diversified purveyor of mobility services, making it the automotive equivalent of Apple Inc.

Like Apple Inc., Barra wants GM to roll in revenue monthly or quarterly long after the initial product is sold.

According to Barra, GM is investing in electric vehicles and expansion of business lines that promise recurring revenue streams.

GM’s new ventures could add tens of billions to the future revenue and push operating profit margins above the current 8 percent it achieved in 2020, and the 10 percent it has targeted long term.

The shift from stock buybacks to investing in recurring revenue services and a drive to make GM an all-EV company by 2035 has accomplished in a year what a decade of cost cuts and cash returns to shareholders could not.
GM shares hit a post-2010 high of $62.23 on March 18 and are up nearly 50 percent for the year.

A new venture that combines several aspects of GM’s approach is BrightDrop, a unit that will provide electric vans and related hardware to commercial delivery firms, starting with FedEx, along with support services from fleet management to predictive analytics.

Barra also is building GM’s long-standing OnStar telematics business into a platform for selling insurance and other services that can be delivered over the air.