That meant “traditional” automakers like General Motors would have to develop or die.
In an effort to his trailing share price To combat such exaggerated claims, GM made a series of investments starting in 2016 that executives believed would position it as a “mobility company” in place of the aging dinosaur on Wall Street. It launched a shared mobility brand called Maven, launched a vehicle subscription service, bought an autonomous vehicle company, and even designed and developed e-bikes. A 7.8% stake in Lyft was also required.
Some of the deals temporarily juiced the automaker’s share price. But profits never lasted, and Wall Street barely seemed to notice when GM tossed aside many of those high-profile mobility initiatives.
Instead, investors have focused on the automaker’s leaner and more efficient core business operations – something like executives like GM CEO Mary Barra and GM President Mark Reuss have been promoting the company’s move to electric and autonomous vehicles for years. It seems they only needed a global health pandemic to prove it. Where other automakers have struggled, GM has navigated profitably through the coronavirus pandemic so far, and its investors have been rewarded.
“For many years when people were saying what it takes to get the stock moving? Finally I had to say – it sounds perverted – but we may actually have to go into a recession,” Morningstar’s David Whiston told CNBC. “Then GM can finally prove to the market that ‘Hey, all these years we’ve said we’re not like’ old GM ‘and we’re really different … now we have a chance to prove it.’ I think they proved it. “
GM’s stock hit one All time low on March 18th after confirming plans to temporarily close all U.S. factories due to the coronavirus. The stocks have since rallied than that Easy to beat automakers Wall Street’s earnings expectations for the second and third quarters. Announcements to increase and accelerate EV efforts, including the GMC Hummer EVhave also boosted the share price.
“They have good fundamentals, numerically positive, but it also helps the EV narrative accelerate,” Credit Suisse analyst Dan Levy told CNBC. “Overall, I think a positive cycle of news about your efforts in this area helps. It’s a combination of the two that help.”
Levy, who has an outperform rating for GM, said the automaker’s second-quarter performance in the depths of the pandemic was solid evidence of how its restructuring efforts would contribute to a downturn – a key argument for the Wall Street bears.
GM’s shares are up 157% from their March low, including an 18% gain in November. The stock hit a new 52-week high of $ 44.13 per share on Wednesday announced the automaker By 2025, the company increased its investments in electric and autonomous vehicles by 35% to $ 27 billion.
However, not everyone is buying into GM. CFRA Research has a “sales” rating for the Detroit automaker based primarily on the cost of converting its vehicle fleet to all-electric and its competitiveness TeslaThat is roughly three in four EVs sold in the US.
“They did a good job cutting costs and now their sales are really up from the lows they were 6 months ago. That’s positive, but we argue the stock has had an incredible rebound too,” said Garrett Nelson , Senior Equity Analyst at CFRA Research. “In our opinion, much of this is already discounted in the current share price.
“Now investors really need to weigh the reality of this electric vehicle pivot. We think it will be very difficult.”
GM doesn’t fully acknowledge its mobility endeavors, but aside from Cruise, they have electric vehicles and more traditional (and profitable) businesses such as Re-entry into car insurance, what the automaker announced earlier this week.
The coronavirus pandemic was the last nail in the coffin for the mobility brand Maven, from which the company “learned” a lot but was never profitable. It was GM’s first major foray into car sharing and mobility in 2016. After a rapid expansion of activity, including the addition of peer-to-peer vehicle sharing and fleet to Uber and Lyft, the program’s notoriety dwindled.
The compact eBike ARĪV Meld from General Motors
A lesser-known effort by GM to make compact and foldable electric bikes called the Ariv was also eliminated during the coronavirus pandemic in April. It was announced at the end of 2018 as a “last mile” solution for commuters – a problem cities and businesses have been trying to address in different ways for years.
Before the pandemic, the automaker announced that it would end its Book by Cadillac vehicle subscription. The service essentially enabled short-term leases for the entire Cadillac range, with delivery and collection service with white gloves at set costs.
A new version of Book by Cadillac was due out earlier this year, but GM says this has been delayed due to the coronavirus pandemic. A company spokeswoman said internal discussions about the program were “ongoing” but declined to disclose when the program’s start could be postponed.
Cruise, the sole survivor of GM’s mobility efforts, continues to work on the development and use of motor vehicles, most of which are based in California. After the company indefinitely postponed the launch of a Robotaxi fleet for San Francisco last year, the company recently announced a new one Partnership with Walmart in Arizona and has been approved to begin testing unmanned autonomous vehicles in California.