General Motors investors are now assessing the company’s pace of transition to electric vehicles and the chances of competition. However, GM stock could be boosted not only by its success in the electric vehicle market, but also in a dozen innovative markets. Here’s what GM is doing in this area.
Investors in the stock market today see the following two trends:
1. Among the stocks of automakers, those who have taken a course towards electric vehicles are growing.
2. Investment company analysts and industry experts provide higher long-term forecasts for those carmakers who, following the example of Tesla (TSLA), are building a model to generate income from autopilot software updates in car computers.
Auto sales statistics change depending on the season and companies strive to create additional stable sources of income in the form of subscription services (software updates, insurance).
General Motors (GM) is following these two trends because, like many other global automakers, today it does not want to be limited to auto production.
GM began publicly announcing its new markets and directions back in 2016 when it acquired the autonomous driving company Cruise. The company managed to find funding for the development of new products by cutting costs and closing low-profit businesses in Europe, Russia and other markets.
In 2014, GM CEO Mary Barra cut about 64,000 jobs.
Pam Fletcher, GM’s vice president of global innovation, told CNBC that the company’s innovation division has identified $ 1.3 trillion in new market opportunities that could complement the company’s core business. This does not include the $ 8 trillion market potential. for the Cruise company or the urban airplane market valued at over $ 1 trillion.
Here’s What General Motors Investors Need To Know Today
In June, GM announced an increase in its investment to $ 35 billion by 2025 as part of its goal of fully converting to production of electric vehicles by 2035.
The company strives to achieve “triple zero” in eliminating emissions, accidents and congestion (via autopilot).
GM has a new commercial division, BrightDrop, which manufactures and markets EV600 electric vans, specifically designed to deliver goods with a range of up to 400 km. fully charged GM’s next generation Ultium battery.
Image: GM EV600 all-electric vans. Image source: GM.
The first 500 GM EV600 units will arrive at FedEx this year, with wider van availability expected in early 2022, according to the company.
General Motors also developed the BrightDrop EP1 electric pallet to optimize the movement of goods from distribution centers to delivery points or from the vehicle to the customer’s door.
Image: BrightDrop EP1 electric pallet. Image source: GM.
GM also has the OnStar brand, which provides auto insurance, vehicle logistics and security services.
GM is also developing the Cadillac halo, a line of innovative vehicles such as self-driving cars and electric vertical take-off and landing aircraft (pictured below).
Image source: GM.
These efforts demonstrate that GM is preparing to increase the overall targeted market for its products. Partnerships with other companies help it attract additional funding and resources.
For example, in 2018 SoftBank invested $ 2.25 billion in Cruise, and Microsoft (MSFT) partnered in January 2021 to offer the capabilities of its cloud platform Azure in launching self-driving cars from GM.
In May, gene. GM Director Mary Barra told investors that GM remains fully committed to investing in its new ventures and electric vehicles, despite the pandemic and the ongoing global shortage of semiconductor chips, calling them temporary difficulties.
“This will not affect our transformation and growth strategy,” she said.
Assessment of GM potential by market analysts
Morningstar analyst David Whiston said many of GM’s new divisions could have “great upside” that is probably not factored into the current stock price because it is early and difficult to predict how big they might become.
Morgan Stanley analyst Adam Jonas called these GM innovations “hidden gems,” including some of the company’s more traditional segments like Corvette, Cadillac and its finance arm.
Bank of America Global Research analyst John Murphy described the new business units, in particular BrightDrop, as proof that GM has “best-in-class technology to compete.” He told investors that new segments could be “decoupled and monetized over time.”
GM shares are up 112% over the past year, up 36.8% since early 2021. GM’s market cap is around $ 80 billion.
GM plans to host an investor presentation this fall on its growth initiatives.
“We will use this event to gain a deeper insight into our growth strategy, financial capabilities and everything that drives them, including software, hardware and services, as well as our strong brands,” said Barra.
Also read “Here are two of the best promotions to invest in autonomous driving technology.”