General Motors makes big steps towards an electric future — and investors are loving it - The Average Joe

    General Motors makes big steps towards an electric future — and investors are loving it

    Victor Lei — Head of Research

    Victor Lei — Head of Research

    April 8, 2021

    General Motors Electric Vehicle

    April 8, 2021

    In the pickup truck triopoly — 3 companies (GM, Ford and Stellantis) control 94% of the market.

    Upstarts like Rivian, Tesla’s Cybertruck ($TSLA) and Lordstown Motors ($RIDE) are trying to break the market but General Motors isn’t about to let that happen.

    On Apr. 6, GM made an announcement to build its electric Silverado pickup model in its Detroit plant — another push towards going electric in what has already been a killer year for GM’s stock.

    General Motors is going all-in on electric vehicles

    The century-old carmaker went through it all — reinventing the carriage, going through a 2009 bankruptcy and now, navigating its way through an electric future. Since the start of 2020, GM made big announcements towards a focus on going electric:

    • Ramped up EV investment with plans to launch over 30 EV models be all-electric by 2035
    • Announced plans for the addition of 3,000 engineers to focus on software and product development.

    In 2021, GM’s stock is up 46% — ahead of other EV carmakers. But GM’s ambitions go beyond trucks and even cars…

    Mary Barra, the CEO leading the change

    In 2014, Barra was brought in to turn around the once struggling GM (the turnaround was a success). One of her tasks was positioning GM for the future — with investments in innovative projects and startups:

    • Cruise — a self-driving tech company majority-owned by GM brought in a $2b investment from Microsoft in Jan. 2021.
    • BrightDrop — an electric delivery van and electrified pallet manufacturer spun out of GM in Jan. 2021

    For investors… Big returns by changing the narrative

    Before 2009, Dominos ($DPZ) was once just another pizza chain with a mediocre tasting pizza and poorly performing stock. Between 2009-2012, Dominos reinvented their pizza recipe, focused on digital ordering and utilized digital channels to connect with customers — its stock surged over 20x in the past 10 years.

    Sound familiar? GM is changing the narrative with a focus on going electric:

    • Compared to EV carmakers like Tesla and NIO, General Motors is trading at a heavy discount
    • If GM’s transition towards EV is successful, GM’s stock could move up to trade at a closer valuation to other EV stocks.

    The best performers aren’t always found in the companies building innovation — but also in the companies using technology to reinvent themselves

    Learn more: Another carmaker is moving towards EV — and just like GM, its stock is on the rise

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