Entering new markets
Investors in General Motors are now assessing the pace of the company's transition to electric vehicles and the chances of competition. But GM shares can get a boost not only from successes in the electric car market, but also in a dozen innovative markets. Here's what GM is doing in that direction.
Investors in the stock market today see the following two trends:
- Among carmaker stocks, those that have embraced electric vehicles are on the rise.
- investment analysts and industry experts are giving higher long-term forecasts for those automakers who, following the example of Tesla (TSLA), are building a revenue model for updates to autopilot software in on-board car computers. Auto sales statistics vary from season to season and companies are looking to create additional stable sources of revenue in the form of subscription services (software updates, insurance).
General Motors (GM) is following these two trends because, like many other global automakers today, it does not want to limit itself solely to producing cars. GM began publicly announcing its new markets and areas of development back in 2016, when it acquired the autonomous driving company Cruise. The company managed to find funding for new product development through cost-cutting and the closure of marginally profitable businesses in Europe, Russia and other markets.
GM CEO Mary Barra cut some 64,000 jobs in 2014.
Pamela Fletcher, GM's vice president of global innovation said in an interview with CNBC that the company's innovation division has identified new market opportunities worth $1.3 trillion that could complement its core business. That doesn't include the $8 trillion market potential for Cruise or the $1 trillion-plus market for urban air transport aircraft.
GM shares have risen 112% in the past year, and are up 36.8% since the start of 2021. GM has a market capitalization of about $80 billion.
GM plans to make a presentation to investors this fall on its growth initiatives.