General Motors Announces the First of a String of Expected Positive EV Developments

In what should prove to be the first in a string of positive electric vehicle announcements, General Motors Company (NYSE: GM) last week delivered its first five BrightDrop EV600 electric vans to FedEx. 

FedEx has ordered a total of 500 of the GM-manufactured vans, which have a range of around 250 miles and 600 square feet of cargo space, as part of its strategy to become carbon neutral by 2040. FedEx has more than 200,000 motorized vehicles and plans to integrate GM’s van into its fleet beginning in 2022.

The BrightDrop vans are powered by GM’s new Ultium battery platform. The Ultium batteries are produced by a joint venture of GM and Korean battery maker LG Chem at large manufacturing facilities in Ohio and Tennessee. The unit cost of the Ultium battery represents about a 90% cost reduction from the battery first installed in GM’s Chevrolet Volt in 2010.

GM’s BrightDrop EV600 van

GM is also just now beginning to deliver the first editions of the 1,000-horsepower GMC Hummer electric pickup truck which will likewise be powered by Ultium battery technology. A total of 1,200 Edition 1 models will be produced, the first of which was auctioned off earlier this year at Barrett-Jackson’s Scottsdale, Arizona auction for an astounding US$2.5 million. The Edition 1 has a price tag of around US$110,000.

The GMC Hummer electric pickup truck rolls off the line.

In addition, GM plans to reveal its new Chevrolet Silverado EV on January 5, 2022 in a virtual presentation. The company had planned to unveil the vehicle at the Consumer Electronics Show (CES) in Las Vegas, Nevada on that date, but pulled out because of the rapid spread of the Omicron COVID-19 variant. The Silverado is scheduled to go into production in early 2023.

Finally, according to GM, its Cadillac Lyriq electric SUV was reaching its final steps before production in late November 2021. First deliveries are scheduled to be in 2Q 2022. GM started accepting reservations for the Lyriq in mid-September 2021. GM said the reservation book filled up in just ten minutes; however, the company has not said how many non-binding US$100 reservations it accepted, nor has it announced the number of Lyriqs it plans to build in 2022. 

GM plans to invest US$2 billion in the Lyriq SUV. It will be built at the factory in Tennessee which produced the Saturn models. The Lyriq reportedly has a driving range of around 300 miles; its starting price could be around US$60,000.

GM’s financial position is extremely strong. It had US$24 billion of cash as of September 30, 2021. The company’s net cash position (net of Automotive debt) was nearly US$7 billion. GM generated about US$15 billion of operating cash flow over the twelve months ended September 30, 2021.

(in millions of US $, except for shares outstanding)3Q 20212Q 20211Q 20214Q 20203Q 2020
Automotive Revenue$23,424$30,744$29,067$34,093$32,067
Operating Income$1,645 $2,882 $3,277 $2,767 $4,424 
Diluted EPS$1.62 $1.90 $2.03 $1.93 $2.78 
Operating Cash Flow($49)$7,162 $1,266 $6,693 $11,231 
Cash$23,940 $29,131 $29,380 $29,038 $36,901 
Automotive Debt$17,022 $17,318 $17,552 $17,469 $28,744 
Shares Outstanding (billions)

Despite these upcoming announcements, GM’s shares have declined around 10% since mid-November when the share prices of EV OEM market leaders Lucid Group, Inc. (NASDAQ: LCID) and Rivian Automotive, Inc. (NASDAQ: RIVN) peaked. Given that investors never applied the same extraordinarily optimistic valuation to GM that they conferred on those two companies, the downward movement in GM stock is difficult to reconcile. After all, the stock market capitalizations of Lucid and Rivian, both of which have booked negligible revenue and enormous losses, are US$62 billion and US$86 billion, respectively. GM, which has recorded about US$117 billion of revenue over the last twelve months, has an equity valuation of US$83 billion.

Perhaps as the prospective news on the Hummer, Silverado and Lyriq gets released within a fairly condensed time frame, GM shares will be able to recover its losses.

General Motors Company last traded at US$56.91 on the NYSE.

Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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