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GM Makes Gains on its EV Future
Stock Analysis & Ideas

GM Makes Gains on its EV Future

American institution and carmaker General Motors (GM) is embracing its future, much to the satisfaction of investors.

More specifically, it’s putting more focus on EVs. That gives it room to readily compete with some of the biggest names in the sector, particularly Tesla (TSLA).

GM has a lot going for it. It can comfortably draw on its sheer name recognition but it’s also looking to drive the future. That foresight makes me comfortably bullish on GM. (See Analysts’ Top Stocks on TipRanks)

Looking at GM’s stock charts for the year so far shows a company that’s experienced substantial volatility. However, the company is still on an upward trend overall. GM started this year in a much worse place than it ended it, kicking off 2021 by just barely breaking $40.

Over the next three weeks, the share price jumped, ultimately clearing the $55 mark for a closing price. A slip followed, then a recovery. This pattern would be in play for the rest of the year. That leads us up to the present day, where the company has made several serious attempts at clearing $65 per share.

GM is flush with electric vehicles these days. The electric Hummer has only recently gone into production. That will offer vital evidence that the company’s new Ultium battery system works as advertised.

Deliveries of the new vehicle are set for December, and reports note that it will get a maximum of 350 miles at a charge. The fully loaded version, however, will only get 329 miles. In a year or so, a full SUV version will go live.

Meanwhile, two more EV models are poised to come out fairly soon. Not long after that, the self-driving Cruise may finally make its appearance.

Wall Street’s Take

Turning to Wall Street, GM has a Strong Buy consensus rating. That’s based on 11 Buys and one Hold assigned in the past three months. The average GM price target of $74.33 implies 24.4% upside potential.

Analyst price targets range from a low of $53 per share to a high of $90 per share.

Yesterday, Today, and Tomorrow

GM is a company that has all its bases covered. The company could easily trade off the value of its sheer name recognition alone. GM has been producing cars for decades, which makes its brands fairly trustworthy.

There are plenty of GM drivers out there who have been GM drivers for most of their lives. Some of them are even part of multi-generational families of GM drivers.

Yet, it’s not resting on those laurels. It’s bringing out quality models today, and it’s also working to secure its future. The EV gains are a major part of that operation, as so many drivers are looking to move to EVs for one reason or another.

With the company poised to release a second Ultium-powered vehicle before the end of this year, it’s not looking to casually get into the market. It’s going in with multiple lines and multiple use cases. It’s taking the EV market seriously.

In early 2022, GM will release an electric Silverado. A Cadillac model, the Lyriq SUV, will follow. The Lyriq is already proving popular; reports noted preorders sold out in just 10 minutes.

Plus, GM also has another trick up its sleeve: the BrightDrop EV600. It already has a major fleet buyer lined up in FedEx (FDX). If the BrightDrop can at least manage to hold its own, GM will likely have a long-term buyer of new vehicles, and spare parts accordingly.

GM will have significant competition afoot from companies like Tesla; the multiple new factories that Tesla has opened are poised to help drive the company’s delivery rate upward spectacularly.

Concluding Views

GM is an American institution. It’s been around about as long as cars have been around. Its cars are directly identified with car culture, and even with America itself.

While it’s a comparative newcomer to the EV space, that likely won’t matter much. Its incredible worldwide name recognition and experience in production will allow it to bypass the initial issues so many startups face.

Basically, GM is ready to compete at Tesla’s level right now. With as many EV makers as there are in the market, how many of them can make a similar claim? For GM, it’s just another line of vehicles to add to the already-successful lines out there.

Better yet, GM will likely prove as good as ever once this chip shortage problem is settled. It’s clear why being bullish on GM is a good plan.

Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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