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GM Ups EV Game But Won't Bow To Wall Street Demands To Spin-Off Unit

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GM Ups EV Game But Won't Bow To Wall Street Demands To Spin-Off Unit

General Motors Company (NYSE: GM) President Mark Reuss said that the automaker has no plans currently to spin-off its electric vehicles division despite being under pressure from Wall Street.

What Happened: Reuss said in an interview on CNBC’s “Power Lunch” program that the Detroit, Michigan-based automaker has analyzed a potential spinoff for its EV business and come to the conclusion that it was not the right thing for its business.

“Creating the dyssynergy on a totally separate entity is something we’re just not prepared to do,” said Reuss. “We looked in-depth at what it would take from a human capital and a regular capital standpoint, and our human resource and expertise that we have at General Motors, I believe is a real competitive advantage.”

The executive admitted that “nothing’s forever” but maintained that a spinoff does not make sense at this time.

When pressed on why should investors believe that GM truly has the forces to catch up and pass Tesla Inc (NASDAQ: TSLA), Reuss answered, “That industrial might and will and scale globally is something that we are bringing to bear in the electric vehicles space.”

Why It Matters: Deutsche Bank AG (NYSE: DB) valued a spun-off GE EV business to be worth $15 billion to $20 billion and with a potential value of up to $100 billion.

GM will move its EV business to a separate division called “EV Growth Operations,” as per CEO Mary Barra. Barra claimed that the Detroit automaker had resources that debutant EV start-ups would “struggle to match,” as noted by CNBC.

The automaker has plans to spend $27 billion on all-electric and autonomous vehicles through 2025, a 35% increase over the $20 billion it announced in March. 

Last month, GM unveiled its Hummer “Supertruck,” which has a range of 350 miles and costs $112,595. The launch edition of the vehicle would be available next fall. 

Price Action: GM shares closed almost 0.2% higher at $42.82 on Thursday and fell 0.75% in the after-hours session. 

 

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Posted-In: electric vehicles EVs Mark Reuss Mary BarraNews Events Tech Media Best of Benzinga

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