DETROIT (Reuters) – General Motors Co (GM.N) has watched with frustration and envy as the market value of electric carmaker Tesla Inc (TSLA.O) has ballooned to more than triple GM’s size, but Wednesday the Detroit automaker is expected to make the case that its EV and self-driving technology strategy deserves a higher value.
FILE PHOTO: General Motors Chief Executive Officer Mary Barra announces a major investment focused on the development of GM future technologies at the GM Orion Assembly Plant in Lake Orion, Michigan, U.S. March 22, 2019. REUTERS/Rebecca Cook/File Photo
GM Chief Executive Mary Barra and her top executives will host an investor conference in New York. They hope to convince potential shareholders GM is more than just a company in a cyclical industry, but a burgeoning technology firm at the forefront of tomorrow’s electric and self-driving cars.
Barra has been restructuring GM’s operations and stressing her goals of readying GM for a future of “zero emissions and zero accidents” for several years.
Still, GM shares trade just above the $33 share price of its November 2010 initial public offering. That has left it with a market capitalization of about $49 billion, compared with Tesla’s valuation of about $160 billion. Tesla shares surged on Tuesday, extending a rally that has more than doubled the company’s market value since the start of the year.
Morgan Stanley analyst Adam Jonas on Monday captured GM’s conundrum in an analyst note entitled, “GM’s Investor Day: What More Can They Do?”
The bulk of GM’s profits is still derived from the fuel-hungry pickup trucks and SUVs sold in the United States. The Chinese market has been the source of a steady $2 billion in profits a year, but that is threatened by a market slowdown, rising costs for electrification and now the disruption caused by the coronavirus outbreak.
Barra’s challenge now is to assure investors that GM can make the leap across the gap separating its profitable internal combustion present and an uncertain electric future.
While gasoline-powered vehicles will make up a large portion of U.S. sales into the 2030s, GM will spend more on developing electric vehicles than those with internal combustion engines over the next five years, Barra said in October.
In December, GM and South Korea’s LG Chem (051910.KS) said they would invest $2.3 billion to build an EV battery cell joint venture plant in Ohio, creating one of the world’s largest battery facilities.
That same month, GM’s Cadillac chief said most if not all of the vehicles offered by the luxury brand would be electric by 2030.
GM said last week it would invest $2.2 billion in its Detroit-Hamtramck assembly plant to build electric trucks and SUVs, including the Cruise Origin, a driverless vehicle for ride-sharing service. GM plans to offer electric trucks, including a premium electric GMC Hummer pickup truck in fall 2021.
Reporting by Ben Klayman and Joseph White; Editing by Nick Zieminski