GM Muses Spinning Off EV Operations to Better Court Investors

 A new report from Bloomberg suggests that GM has been considering spinning off its electric ambitions for a while after seeing startups attract billions of dollars of investment without offering more than a sales pitch. Selling a bunch of real cars to customers is fine, but GM really wants to get back into the good graces of Wall Street, if that’s possible.

During last week’s earnings call, analysts asked CEO Mary Barra if GM would spin off its electric-vehicle operations as a standalone entity.

“We are open to looking at and evaluate anything that we think is going to drive long-term shareholder value,” she said, noting that no options had been removed from the table.

From Bloomberg:

GM now is war-gaming the idea as the company ponders different ways to get credit for its EV plans, though a spinoff isn’t actively being prepared, said the people, who asked not to be identified discussing internal deliberations. Barra was publicly asked about it in light of Tesla Inc.’s soaring valuation and the easy access to capital that unproven EV startups such as Nikola Corp. have pulled off by merging with blank-check companies.

“Investors are telling us every day that they are willing to invest in electric vehicles,” said Emmanuel Rosner, the Deutsche Bank analyst who asked Barra about the idea of a spinoff on July 29. “But they are doing it with electric-vehicle companies, not legacy companies.”

The outlet reported unnamed sources who claimed the view within GM is that these tech startups are attracting billions of dollars in investment while lacking the same tangible might of legacy automakers. It also said to look at the messaging used by General Motors over the last few years, in which it characterizes itself less as a carmaker and more as a technology firm that happens to build automobiles.

This is absolutely not limited to GM, however. The term “mobility company” has been thrown around quite liberally within the industry ever since former Ford CEO Mark Fields toyed with the concept half a decade ago. Despite failing in his quest, Fields’ general strategy has become so commonplace within the automotive sector that someone probably owes him an apology. This will be especially true when/if legacy automakers finally manage to convince investors that their stocks deserve to be as overblown as those belonging to some of these startups. But they’ve yet to find the secret sauce to get Wall Street’s mouth watering thus far.

a version of this article first appeared on TTAC

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