General Motors Inc. (NYSE: GM) ran ads on Fox during the Super Bowl. The message was that it had become a power in electric vehicles (EVs). Is that accurate? Not really. GM does not yet have a suite of EVs to jump-start its move into the sector. Yet, investors believe that its fossil-fuel cars and trucks will maintain earnings as it moves to the new technology. Its stock shows the results. GM’s shares are down 15% in the past year. Shares of the EV industry leader, Tesla Inc. (NASDAQ: TSLA), are off 31%. (Click here for the most fuel-efficient SUVs on the U.S. market.)
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There are reasons Tesla’s stock is off so much. One is that over five years it is up 827%. Even a modest setback will drag it down from such a heady run-up. There have been worries that Elon Musk spends too much time on Twitter. Some of the features in Tesla vehicles are under investigation to determine whether they are safe. Briefly, there was a concern about whether Tesla could continue to grow rapidly. That went away when it said it could make as many as 2 million cars next year.
For now, GM’s primary advantage in the industry is that it posted home run quarterly results. Earnings came in at $2.12 per share, against expectations of $1.69. Revenue was $43.11 billion, compared with a $40.65 billion forecast. GM’s numbers looked better than those of cross-town rival Ford.
GM’s stock has done so well recently because Wall Street believes it can deliver on its EV future. It has begun to release EVs across its brands. As the largest U.S. car company, it has the production, design and dealer network to leverage its legacy fossil-fuel past into the future.
GM is the leader among companies planning to sell EVs in the United States. If it can hold that lead, its shares will continue to outperform.
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