General Motors (GM) breaks out on Friday with stocks up 9% to nearly $ 39.
This decision came after the company had raised its outlook for the year 2018 and provided forecasts for 2019 well above consensus expectations. In addition, management has announced that Cadillac "would become GM's leading brand of electric vehicles" in the future.
Of course, this relates directly to Tesla (TSLA), which is about flat the day. Tesla not only became the world's largest manufacturer of electric vehicles, but he also became the first sedan seller with his model 3. The vehicle finished the year among the top 10 and ranked among the top first five sellers of sedans in the fourth quarter.
It will not be GM's first foray into electric vehicles, but the tone has become much more serious about its progress in this future. Maybe Tesla shows successfully that there is a demand for these vehicles. Perhaps this comes after Cadillac's luxury foreign competitors have also made great efforts in electric vehicles: Mercedes Benz (DDAIF), Porsche, Audi, BMW (BMWYY) and Volkswagen (VLKAY) have all announced different strategies this year.
It is also useful that the costs of the battery decrease. Part of GM's new architecture will help create a "family of profitable electric vehicles," the company said. Further:
"The flexible platform will offer a wide range of body styles and will be available in front wheel, rear wheel and drive wheel configurations, and its most critical components – including battery cells – are designed to be used optimally in all programs The battery system will also be adjustable, depending on the needs of the vehicle and the customer. "
Rather than relying on Chevrolet models to push the limits of electric vehicles, GM is now relying on its luxury line which, hopefully, will attract customers. Unlike Tesla, however, the company does not take advantage of the federal tax credit. Instead, GM has just reached the threshold of 200,000 electric vehicles, marking the beginning of a slow decline in the $ 7,500 federal tax credit. Hit that mark before pushing the Cadillac EV could weigh on sales compared to its competitors who will benefit from the federal tax credit for electric vehicles, but there is no guarantee that this will be the case. Until now, Tesla is the only other company to reach the goal.
GM is looking to integrate its Cadillac brand into the future of electric vehicles.
In all respects, General Motors will not be looking at electrification in the coming quarters. This is repositioning for a much larger commitment and a much larger market for electric vehicles in the future.
"We will continue to strengthen our core business and invest in the technologies that will transform the future of mobility, and it is essential to manage these two areas well to enable General Motors to succeed for generations to come." said the executive director, Mary Barra, in the press release.
This involves reducing sedan exposure, overloading SUVs and trucks, and providing funding for electric vehicles and stand-alone technologies. Investors are waiting for all sorts of updates from the Detroit Auto Show starting next week and General Motors is expected to release its results later this month.