Thursday, December 3, 2020

General Motors has no interest in spinning off EV business

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General Motors has no plans at this time to spin off its electric vehicle business despite pressure from Wall Street to do so, GM President Mark Reuss told CNBC.

Reuss said the Detroit automaker analyzed the potential of a spinoff and determined it would not be the right thing for its business, citing costs as well as benefits of having the EV operations remain part of the larger company.

“Creating the dyssynergy on a totally separate entity is something we’re just not prepared to do,” he said during CNBC’s “Power Lunch.” “We looked at it very carefully. We studied it. 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.”

Wall Street speculation about a potential spinoff of its electric vehicle operations has been growing since the automaker’s second quarter earnings call on July 29. Deutsche Bank said such a company would likely be valued at a minimum of $15 billion to $20 billion, and could potentially be worth up to $100 billion.

Reuss said “nothing’s forever” but spinning off its EV operations just doesn’t make sense at this time.

Instead, GM will separate the EV operations into their own division within the company called “EV Growth Operations,” GM CEO Mary Barra said earlier Thursday afternoon. Barra said GM has the resources that expected EV start-ups entering the market “will struggle to match.”

Barra announced the new EV unit Thursday along with plans to spend $27 billion on all-electric and autonomous vehicles through 2025, an increase of $7 billion, or 35%, from initial plans announced in March.

Shares of GM were up less than 1% during trading Thursday afternoon.

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