General Motors Fundamental Analysis.
Resume of General Motors Fundamental Analysis. GM, one of the world’s largest automakers, is a prominent player in the U.S. auto market, holding the largest market share at 16% in 2022. The company, with its headquarters in Detroit, was founded in 1908 and historically dominated the U.S. auto industry. However, it faced a significant setback during the financial crisis and filed for bankruptcy on June 1, 2009. Remarkably, General Motors swiftly emerged from bankruptcy in just 40 days and, in 2010, launched what was then the biggest IPO in U.S. history. Since then, the company has maintained steady profitability.
General Motors has made a notable recovery and is actively transitioning towards an electric future. By the end of 2025, the company aims to introduce 30 new electric vehicle (EV) models. This shift is supported by its Ultium Drive system, a modular battery platform, which is pivotal in its move to an all-electric vehicle portfolio. Major upcoming EVs include the GMC Hummer e-pickup, Cadillac LYRIQ, Chevrolet Silverado EV, Chevrolet Equinox, Blazer EVs, and an electric version of the GMC Sierra pickup truck.
Operational Structure.
The company operates under four core brands — Chevrolet, Buick, GMC, and Cadillac — and, in partnership with strategic allies, manufactures, sells, and services a wide range of vehicles, including cars, trucks, SUVs, vans, and crossovers.
General Motors operates through 4 segments: General Motors North America (GMNA), General Motors International (GMI), Cruise, and GM Financial. GMNA is a major contributor to the company’s sales, accounting for 89.2% of total sales in 2022. The GMI, Cruise, and GM Financial segments contributed 10.7%, 0.1%, and 8.1% to total sales, respectively. The Cruise segment focuses on autonomous vehicle technology, while GM Financial provides a spectrum of retail loan and lease lending services
PER VS PEERS.
SHARE PRICE VS FAIR VALUE.
PRICE TARGET.
FUTURE GROWTH FORECAST:
REASONS TO BUY.
Positive outlook.
General Motors is demonstrating significant potential in both its electric vehicle (EV) and internal combustion engine portfolios, with robust demand for its full-size pickups and SUVs. Key American brands like Chevrolet Silverado, Equinox, and GMC Sierra are major contributors to the company’s revenue growth. With an ambitious target of a 12% CAGR in revenue through 2025, General Motors is optimistic about reaching over $50 billion in EV revenues by 2025.
New Ev Models.
The company’s aggressive EV strategy includes launching 30 new EV models by the end of 2025. Nine models are expected in the North American market this year alone. High demand is anticipated for models like the GMC Hummer EV, Chevrolet Bolt EV and EUV, Cadillac crossover EV, Equinox EV, Silverado EV, Sierra EV, Blazer EV, and BrightDrop Zevo 600. The BrightDrop venture, focusing on an ecosystem of electric first-to-last-mile products will enhance the company’s prospects significantly. GM is aiming to reach an annual EV production capacity of 1 million units in North America by 2025.
Battery plants.
Central to this EV expansion is the Ultium Drive system. A modular battery platform that facilitates the transition to an all-electric vehicle lineup. GM’s investments in battery plants in Ohio, Tennessee, and Lansing, along with a $650 million investment in Lithium Americas, underscore its commitment to scaling up e-mobility. The introduction of Ultium Charge 360, designed to improve the charging experience, complements this strategy. Beyond Ultium, GM’s Ultifi platform should drive leadership in software and services.
Costs reduction.
Financially, General Motors is bolstering its position through cost-reduction strategies. After successfully implementing a $2 billion cost-reduction plan earlier this year, the company plans to cut an additional $1 billion in fixed costs between 2023 and 2024. This includes a voluntary separation program, and reductions in sales, marketing, engineering, travel, and administrative expenses. GM aims a net reduction of $2 billion in automotive fixed costs by the end of 2024.
Autonomous vehicles.
General Motors is also making strides in autonomous vehicle (AV) technology through its Cruise division. Holding a dominant position in the self-driving landscape, Cruise has completed over 1.5 million driverless miles. The unit aims to generate $1 billion in revenue by 2025 and $50 billion annually by 2030. The forthcoming launch of Cruise Origin AV is set to further enhance GM’s prospects in this area.
Financial health.
Financial stability is a strong suit for General Motors. As of September 30, 2023, the company reported total automotive liquidity of $42.5 billion, including $29 billion in cash, cash equivalents, and marketable debt securities. Its times interest earned ratio of 12.52 significantly surpasses the industry average, indicating a low risk of default. Boosting investor confidence, GM recently announced a $10 billion accelerated share repurchase program and a 33% dividend increase in 2024.