Automotive > Infotainment & Telematics Blog

GM in the Eye of SPAC Hurricane

by Roger Lanctot | Nov 02, 2020

The news arrived a couple weeks ago of a pilot project whereby six U.S. state-level departments of transportation (DOTs) would leverage anonymized vehicle data (mainly from GM) to create and communicate hurricane evacuation routes in partnership with data monetization company Wejo. The announcement was just the latest warning of a real reputational hurricane brewing for General Motors.

Wejo is the beneficiary of an unusual 2019 investment from GM which both invested and took a stake in the company while simultaneously providing access to its own connected car data – an ‘in-kind’ consideration made at the time of the Wejo investment which was valued at $70M. The cash portion of the investment round, which was described as being “led” by GM, reportedly included $25M from GM and imputed an organizational value to Wejo of $275M with GM gaining a 35 percent stake in the company.

The deal is unusual because:

A)  Wejo had yet to prove the value of its “data monetization” business model

B)  Gave a substantial stake in Wejo to a single OEM which was likely to put off other OEMs from engaging with the company

C)  Created a potential conflict with GM’s existing data monetization strategy which included relationships with multiple partners including insurance companies and fleet operators

D)  Appeared to be turning Wejo into a reseller of GM data for the purpose of fulfilling short-term internal GM revenue objectives – nearly all of the GM executives responsible for the deal are either no longer at GM or now are in different roles

The hurricane evacuation routes announcement further highlights the folly of the deal, showing Wejo leveraging GM data to build its own credibility at the expense of GM and OnStar. There is little doubt that nearly all of Wejo’s existing anonymized location data being used to develop evacuation routes insights is the GM data implicated in the deal and derived from the OnStar in-vehicle connectivity platform.

I have long argued ( that GM should use OnStar location data for the very purpose targeted by Wejo as part of its collaboration with U.S. DOTs. During past hurricanes GM has turned its OnStar subscription-based service on for lapsed drivers of OnStar-equipped vehicles and, more recently, added Crisis Assist to help connect family members trapped in traffic or other emergency vehicle-related circumstances during crises.

GM has never used its OnStar-derived vehicle location data insights – sometimes called floating car data – to help OnStar users to identify official and available evacuation routes in the event of a weather emergency like a hurricane – or even to provide traffic-related insights. (I once wrote that OnStar had had the potential to be Waze before there was a Waze.)

Now it appears that Wejo is going to offer this service opportunity directly under its own brand while making it and the data available to competitors and other entities, robbing GM of a brand-building and revenue opportunity and possibly even alienating GM owners. Somewhere over the past 20+ years of OnStar vehicle connectivity GM lost sight of the fact that vehicle data is a core corporate asset and its care and retention represents something of a sacred and legal trust with customers.

It’s highly unlikely that GM has disclosed its Wejo data sharing activities to current and past OnStar subscribers. Somewhere in the vehicle sales process there is likely a data sharing opt in that customers may or not be aware of. 

It is less than 10 years since GM was forced by outraged customers and U.S. senators to reverse an announced change in its terms and conditions stating that the company reserved the right “to share or sell” any data in anonymized form with third parties unless customers explicitly opted out. Unbeknownst to most OnStar subscribers, however, is the fact that GM retains access to vehicle data today even in the event that customers do not renew their OnStar subscription.

It is clear, though, that the data from both existing and lapsed subscribers is being shared with Wejo. Precisely what data is being shared is not clear, though location data appears to be a key element – maybe the only important element.

Wejo claims to have 18M connected cars in North America sharing data – that more or less correlates with GM’s claims of 20M connected cars globally and implies a preponderance of GM data in the Wejo mix. Prior to the GM deal Wejo had claimed 7M connected cars on its platform with GM reporting approximately 11M connected cars in North America.

Now news arrives from SkyNews describing Wejo’s plans to rev up a $350M funding round possibly involving a SPAC – a special purpose acquisition corporation. Clearly Wejo’s goal is to pump up the perceived potential value of the company based almost entirely upon the perceived value of its access to GM’s vehicle data.

The SkyNews report on Wejo bears all the earmarks of the debacle that unfolded from GM’s recent investment in Nikola Motors – which was painted by friendly GM analysts as a no-downside, win-win for GM, which offered up engineering services for a stake in Nikola and help in building Nikola’s Badger EV pickup, gaining a customer for GM’s Ultium EV powertrain, and adding a collaborator in commercial vehicle hydrogen propulsion.

GM announced the Nikola deal in September, mere weeks after the departure of CFO Dhivya Suryadevara, who left to join Stripe as CFO. Nikola Motors had gone public in June of 2020, merging with SPAC-based VectoIQ – an investment advisory and consulting company led by former senior GM executive Steve Girsky and other GM veterans. 

The GM-Nikola deal is still pending. Meanwhile, Nikola’s stock price continues to slide in the wake of various revelations regarding the company’s claimed progress toward delivering hydrogen-based vehicles or charging stations and the departure of chairman, Trevor Milton.

Immediately following this apparent blunder, GM appears to have spun itself into another SPACky partnership with yet another company looking to leverage a GM deal for financial gain. Just as Nikola founders and early investors are already counting their millions while GM works to remove the egg from its corporate face, Wejo steps forward hinting at its own SPAC ambitions. Perhaps it is no surprise that Wejo, like Nikola and VectoIQ, has a chairman who is a former senior GM executive.

GM is entitled and I would argue is, in fact, obliged to collect vehicle data from its vehicles to ensure reliable performance and anticipate potential failures. GM might also be expected to use access to vehicle data to create value propositions and services capable of enhancing and rendering safer the driving experience including traffic information and notifications of upcoming road hazards or construction.

Handing this data access off to third parties without adequate disclosures, or even doing so before providing customers access to their own data or creating an own-branded service to OnStar customers, falls short of an ideal approach to proper vehicle data hygiene. Even the basic principles of the Alliance of Automobile Manufacturers – presumably agreed to by GM – do not appear to have been maintained:

A.   Provide customers with clear, meaningful information about the types of information collected and how it is used.

B.   Provide ways for customers to manage their data.

C.  Obtain affirmative consent before using geolocation, biometric, or driver behavior information for marketing and before sharing such information with unaffiliated third parties for their use.

A fourth principle worthy of being added to these might be a provision for customer compensation. If a third party can turn access to GM vehicle data into a massive financial windfall, it is GM customers that ought to benefit first. Perhaps it is time for GM to start waiving OnStar subscriptions entirely. If not, perhaps it is time for GM to reconsider its approach to monetizing vehicle data.

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