General Motors Company (NYSE:GM) is not planning to spin off its electric vehicle business. President Mark Reuss echoed the sentiments at a time when the auto giant is under immense pressure from Wall Street to do so.
EV Spinoff Calls
According to Reuss, an automaker analysis has found that a spinoff of the sought would not benefit the parent company as envisioned. The executive has already cited costs as one of the reasons why the Detroit based automaker won’t be divesting its EV operations.
Electric vehicle operations remain part of General Motors’ long-term plans at a time when it’s under immense pressure more than ever. The emergence of Tesla as the biggest automaker by valuation is all but threatening GM prospects as demand for EV cars continues to soar.
General Motors has had to ramp up investments on the development of electric cars as well as self-driving cars to keep up with a major transition taking place, as focus shifts to vehicles with zero-emission featuring self-driving components.
GM EV Ambitions
Amid the EV ambitions, Wall Street’s push for a spinoff has been growing ever since the company reported its second-quarter earnings on July 29. In a research note, Deutsche Bank noted that the spinoff would result in a company valued at a minimum of between $15 billion and $20 billion. Likewise, it could end up being worth more than $100 billion.
General motors have already quashed the valuation, insisting that spinning off the EV operations does not make sense at this time. Instead, it plans to separate the EV operations into their unit under the EV Growth Operations.
According to GM CEO Mary Barra, General Motors has the financial muscle to make the EV Growth Operations unit work, something that most EV startups don’t have. Likewise, General Motors is to spend $27 billion on all-electric and autonomous vehicles through 2025. It represents a 35% increase from $7 billion that the company intends to spend in March.
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