GM accelerates EVs — but is worth less than Chinese EV maker

Source: By David Ferris, E&E News reporter • Posted: Sunday, November 8, 2020

General Motors Co. posted surprising profits yesterday and said it would use the proceeds to speed its transition to electric vehicles, even as a Chinese EV maker overtook it in market value.

Also last week, GM’s EV battery plant, which it runs as a joint venture with South Korea-based LG Chem Ltd., started posting for more than 1,000 job openings. The $2.3 billion factory is under construction in Lordstown, Ohio.

GM reported net income in the third quarter of $4 billion, far more than in the same quarter last year and higher than Wall Street’s expectations. Sales are rebounding after the coronavirus lockdown, led by trucks and SUVs.

On a call with investors yesterday, GM Chief Financial Officer John Stapleton said that the plumper balance sheet would underpin “a strategic decision to accelerate investments in our all-electric future.”

CEO Mary Barra said on the same call that “we’re going to go hard at EVs and demonstrate the assets that we’re going to bring to it. And the North America performance … allows us to do that.”

GM already planned to spend $20 billion on electric vehicles by 2025. Its most recent move is the new Hummer EV, which the company unveiled in an ad at the World Series last month (Energywire, Oct. 21).

GM’s electrification push, however, hasn’t boosted investor confidence. GM’s market capitalization of $53 billion rose only slightly on yesterday’s rosy economic news.

Some investors were pleased.

“We would argue this is what the market wanted to hear and is GM’s best use of capital,” wrote RBC Capital Markets analyst Joe Spak in a note to investors.

Still, GM was overtaken this week by Chinese EV maker Nio Inc., which boasted a market cap of $57 billion at the market close yesterday. The news was first reported by Barron’s.

Nio becomes the second EV maker after Tesla Inc. to see its stock head into the stratosphere. This year, Tesla’s market capitalization has risen to over $400 billion, more than any global automaker — even though it makes a relatively small number of cars.

Nio went public on the New York Stock Exchange in 2018. It entered 2020 running out of money, but it arranged for a $1 billion infusion of cash in April. In May, as China was emerging from its pandemic lockdowns and GM was just getting started again, Nio’s stock began a steep upward climb, ultimately increasing in value 10 times over.

Nio is selling four electric models in China: a sports car and three SUVs. Like Tesla, it has staked much of its future success on developing vehicles that are also autonomous. It alone among leading EV makers is building a solution to solve charging woes by swapping out customers’ batteries. Its vehicles are not yet available in the U.S.

In other EV news, the Swedish truck maker Volvo Group announced yesterday that it will make electric versions of its heavy-duty trucks available to customers in Europe next year. Also in early 2021, Volvo said it will start producing an electric tractor-trailer at its U.S. factory in Virginia.

Meanwhile, Bentley Motors, the luxury auto brand owned by Volkswagen AG, said yesterday it would sell only electric vehicles by 2030.