General Motors There are currently no plans to outsource the electric vehicle business despite pressure from Wall Street, GM President Mark Reuss told CNBC.
Reuss said the Detroit automaker analyzed the potential of a spin-off and determined that it wasn’t right for its business. He cited the costs and benefits of keeping EV operations part of the larger company.
“We’re just not ready to create the dyssynergy on a completely separate unit,” he said during the CNBCs “Power Lunch.” “We’ve looked at it very carefully. We’ve studied it. We’ve looked in depth at what it would mean from a human and regular capital standpoint, and our human resources and expertise that we have at General Motors, are a real competitive advantage in my opinion. “
Speculation on Wall Street about a possible spin-off of the electric vehicle business has increased since then the automaker’s earnings call for the second quarter on July 29th. Deutsche Bank said such a company would likely be worth at least $ 15 billion to $ 20 billion and could potentially be be worth up to $ 100 billion.
Reuss said “nothing is forever” but outsourcing its EV operations just doesn’t make sense right now.
Instead, GM will split EV operations into a separate department within EV Growth Operations, said GM CEO Mary Barra early Thursday afternoon. Barra said GM has the resources that EV startups that hit the market “will struggle to keep up” would be expected.
Barra announced the new EV unit on Thursday along with plans Spend $ 27 billion for fully electric and autonomous vehicles, an increase of $ 7 billion, or 35%, over the original plans by 2025 announced in March.
GM’s shares rose less than 1% during Thursday afternoon trading.