Tesla Thrives as GM Collapses
Less than a year ago, Wall Street believed General Motors had discovered the secret to transforming the manufacturer from a fossil fuel-dependent company to one at the forefront of the electric car market. What happened?
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Less than a year ago, General Motors CEO Mary Barra looked like a genius. Wall Street believed she had discovered the secret to transforming the manufacturer from an ungainly fossil fuel-dependent company to one that would move to the forefront of the electric car market. At that point, GM was viewed as a potential rival to Tesla. However, it was joined in that effort by every other large car company in the world.
GM’s shares have dropped an extraordinarily awful 21% this year, according to Yahoo Finance. Over the same period, Tesla’s stock has risen 4.5%, even as tech stocks have been hammered. Tesla’s market cap is $1.4 trillion. GM’s is $67 billion.
GM’s recent earnings were decent. However, Barron’s pointed out, “Morgan Stanley analyst Adam Jonas has concerns about GM’s ability to transition to an all-electric future.” Jonas downgraded GM’s shares from Buy to Hold.
GM’s trouble is that it, like most other legacy car companies, it has announced a formula to make the transition to electric and autonomous vehicles. However, as Tesla’s sales rose worldwide, GM has trouble selling even a modest number of electric vehicles (EVs). Additionally, GM’s chip shortage (which also has plagued most of the industry) has slowed sales. For some reason, the markets believe Tesla has done a better job managing its supply line. Its next earnings report will show if that assumption is true.
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Last June, GM announced it would invest $35 billion from 2020 to 2025 to increase its EV and autonomous car and truck lineup. At the time Barra said, “We are investing aggressively in a comprehensive and highly-integrated plan to make sure that GM leads in all aspects of the transformation to a more sustainable future.”
GM’s hurdle is that very few people may want its EVs, no matter how well it does in designing and marketing them. It faces a sea of competition, led by Tesla, which has a head start of several years, both in sales and technology.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
