It’s official. GM is a tech company. This is something I’ve known for a while. Now Wedbush technology analyst, Dan Ives, agrees as well. Ives began covering General Motors last week with a buy rating on the stock. This is notable because Ives covers tech companies like Apple, Microsoft, Nvidia and Tesla (Note: Tesla is a tech company in my opinion as well, but suffers many of the same challenges as legacy automakers. Many Tesla bulls miss this fact). Ives now understands GM’s investments in EVs, battery technology and autonomous driving capability. Per Ives, “GM is no longer a traditional auto company, trading based on book value, but a broader disruptive technology play that can start to trade at multiples similar to the likes of Tesla and other pure-play electric vehicle companies.”
When I initially acquired GM shares in January 2017 at $37.43, what I saw then was a company committed to a future of electric vehicles and autonomous mobility solutions. This was well before automotive analysts (and certainly before tech analysts like Ives) began to come around on GM’s future. As was the case in 2017, GM is the best-managed automaker in the world with a very profitable legacy business helping to fund the transition to its EV future. As of Friday’s close, GM stock has grown 57% since early 2017 primarily on the increased recognition of a profitable EV future (the stock has increased 250% since the pandemic-driven lows of March 2020).
If Tesla is fairly valued. General Motors is still very undervalued.
Today, General Motors is even better positioned than what I knew in 2017.
The company is committed to having 30 new EVs globally by 2025
GM established a new electric vehicle commercial business, BrightDrop.
GM has developed new battery cell technology (Ultium), along with a decision to vertically integrate battery cell production in a partnership with LG Chem.
A $500 million investment in autonomous driving firm, Cruise, in 2016 is now a GM subsidiary helping the company develop self-driving vehicles along with taxi service business model.
Cruise now has multiple outside investments and partnerships from Honda, Microsoft, Walmart, and Softbank. Cruise is now valued at $30 billion.
The company has developed fuel cell technology and has business partnerships Honda, Navistar and Wabtec (locomotives).
The company has a military business unit, GM Defense, with a $25 billion business opportunity using current legacy capabilities as well as future EV and autonomous technologies under development.
Although Tesla gets most of the EV investment attention, there’s no other legacy automaker or new EV startup with GM’s portfolio of technologies, business models and partnerships that will drive a profitable future of EVs, and mobility solutions. While Tesla is valued at $623 billion today. GM’s valuation is only $85 billion. If Tesla is fairly valued. General Motors is still very undervalued.
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TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.