Last week Wedbush analyst Dan Ives teased his upcoming analysis of GM (GM) following a factory visit, claiming the automaker was the most “underestimated” in the industry. Today we have his full report — which sticks with his bullish theme.
“On the tour section at GM HQ, we were able to see the company’s battery & innovation facility along with the vehicle design studios, the two critical areas GM is betting the company’s future on for the coming decades,” Ives wrote in a note to investors. “After the day, it was clear to us that GM is at an inflection point in innovation, spearheading the overall shift to EV with vehicle quality, a goal-oriented employee base, and profitability/cash flow all in mind.”
Ives’s visit to GM and subsequent analysis of the trip comes after last month’s GM investor day event in New York City, where the company updated its EV gameplan.
The automaker said then that its EV portfolio will be “solidly profitable in 2025” in North America, as the company scales EV capacity to more than 1 million units annually. The milestone is years ahead of schedule, when it originally expected margins for EVs to be comparable to gas-powered cars by 2030.
The first big factor as to why Ives is bullish on GM is that he believes the Street is not recognizing the full value of GM’s proprietary battery tech, which is the Ultium platform.
“With the ability to use the same battery platform for almost any different chassis, numerous vehicles are now able to be built on top of the same exact platform, extensively lowering the company’s traditional large R&D costs an automaker would see either in ICE vehicles or retrofitting battery packs into modern cars when releasing new vehicles,” he says.
Ives says the next generation of Ultium batteries will help reduce costs for GM, as well as being an innovation driver as well. Ives call Ultium GM’s “secret sauce.”
The second component of the GM EV story for Ives is the ramp up in design and engineering. While GM has been slower than its rival Ford (F) in terms of getting multiple EVs in the marketplace, Ives believes patience will pay off for the automaker as GM has taken that time to improve the Ultium platform in order to roll out a number of EVs at the same time, instead of piecemeal.
Ives says the “highlight” of the trip was seeing where GM takes designer sketches to final product, with the Ultium platform giving the company a cost-effective way to produce and bring “cutting edge” vehicles to the market.
“With GM set to release a number of new EV models over the next 12 to 18 months, this pivot to an EV future is key to GM’s growth story as the company continues to invest in its Ultium platform while expanding its offering across the board,” Ives said.
Wedbush maintained its “outperform” rating on GM after the visit and $46 price target.
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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Source: https://finance.yahoo.com/news/gm-is-at-an-inflection-point-in-innovation-analyst-says-after-factory-visit-155500103.html