General Motors Company (NYSE:GM) President Mark Reuss said that the automaker has no plans currently to spin-off its electric vehicles division despite being under pressure from Wall Street.
What Happened: Reuss said in an interview on CNBC’s “Power Lunch” program that the Detroit, Michigan-based automaker has analyzed a potential spinoff for its EV business and come to the conclusion that it was not the right thing for its business.
“Creating the dyssynergy on a totally separate entity is something we’re just not prepared to do,” said Reuss. “We looked in-depth at what it would take from a human capital and a regular capital standpoint, and our human resource and expertise that we have at General Motors, I believe is a real competitive advantage.”
The executive admitted that “nothing’s forever” but maintained that a spinoff does not make sense at this time.
When pressed on why should investors believe that GM truly has the forces to catch up and pass Tesla Inc (NASDAQ:TSLA), Reuss answered, “That industrial might and will and scale globally is something that we are bringing to bear in the electric vehicles space.”
Why It Matters: Deutsche Bank AG (NYSE:DB) valued a spun-off GE EV business to be worth $15 billion to $20 billion and with a potential value of up to $100 billion.
GM will move its EV business to a separate division called “EV Growth Operations,” as per CEO Mary Barra. Barra claimed that the Detroit automaker had resources that debutant EV start-ups would “struggle to match,” as noted by CNBC.
Last month, GM unveiled its Hummer “Supertruck,” which has a range of 350 miles and costs $112,595. The launch edition of the vehicle would be available next fall.
Price Action: GM shares closed almost 0.2% higher at $42.82 on Thursday and fell 0.75% in the after-hours session.