General Motors (GM) will seek to reassure investors on Tuesday that it can maintain healthy profit levels while becoming a more formidable EV rival to Tesla (TSLA) and Ford (F). GM stock regained a key support level on Monday.
GM Investor Event: What To Expect
The investor event on Tuesday comes after GM’s U.S. EV sales vaulted 60% in the third quarter, compared with a 2% decline for its total new vehicle sales. The auto giant overtook Ford to become the No. 2 EV seller behind Tesla in the U.S. market, at least for now, thanks to a growing lineup of new and cheaper electric models. It has overcome production challenges as well.
But investors remain worried about EV losses for automakers given the high costs of developing this technology. Moreover, American consumers remain lukewarm about electric cars thus far.
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“We expect more details on (GM’s) battery electric vehicle plans and margins,” RBC Capital Markets analyst Tom Narayan wrote in an Oct. 3 note to clients. In particular, he expects General Motors to discuss “how it can profitably produce the Equinox with a $27,000 price tag,” with government tax credits for locally manufactured batteries likely helping it out.
Later this week, Tesla will hold its own event for investors, focusing on robotaxis and possibly revealing the cheapest Tesla model yet. The EV giant is expected to be a main beneficiary of battery production tax credits over the next decade.
Despite surging sales, GM may withdraw its target to produce 200,000-250,000 EVs in 2024, Narayan said. He estimated the automaker is on track to sell more than 100,000 EVs this year, far below its production guidance range.
The first-ever Chevy Equinox electric crossover will be key to GM’s future EV growth strategy. That model can cost as low as $27,500 after tax credits while providing 319 miles of estimated driving range. It made up 30% of the roughly 32,100 electric vehicles that GM sold in Q3.
GM Stock Retakes Key Level Of Support
Shares of General Motors edged 0.7% higher on the stock market today. GM stock cleared a 49.86 buy point on Sept. 2, then pulled back to the 50-day moving average. It closed just above that support level on Monday.
Ford and Tesla stock both fell on Monday. Ford stock remains below a falling 50-day line and even further under the 200-day line. Tesla stock has a 271 cup-base buy point, but is just finishing up a handle that will lower its entry to 264.84 by Tuesday morning.
GM To Go Slower On Electric Vehicles?
Sources told Reuters last week that GM on Tuesday may discuss an EV strategy focused “less on aggressive growth and more on stability.”
The unnamed sources also said that the auto giant may send a message that profit margins on internal combustion engine (ICE) vehicles have not peaked and that EV profits are closer than expected.
Recently, automakers faced a surprise EV slowdown in the middle of their shift away from ICE cars. That forced GM to yank several prior targets for electric cars, though EV momentum is now on the upswing.
Year to date, GM stock is up 28% vs. declines for shares of both Tesla and Ford. That reflects booming ICE profits thanks to strong pricing and lower incentives vs. other automakers.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
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