GM intensifies electric push in China amid EV spinoff talk

Kalea Hall
The Detroit News

Detroit — General Motors Co. is dialing up its aggressive electric-vehicle plans at home and abroad — even though it's yet to see the fruits of its multibillion dollar investments in its share price.

During Tech Day in China Wednesday, the equivalent of GM's EV Day hosted in March at the Warren Technical Center Campus in Michigan, the Detroit automaker showed off the technologies it will use to drive into the future, including the new Ultium battery system. It also showed next-generation electric vehicles to be launched in China.

GM plans to spend $20 billion on electric and autonomous vehicle development through 2025, deliver 20 electric vehicles globally by 2023 and sell 1 million of them globally by mid-decade. Meanwhile, analysts are pushing GM to spin off its electric-vehicle and battery business to reap the valuations of such electric start-up companies as Tesla Inc. The Silicon Valley EV maker is valued at $350 billion compared with GM's $42 billion.

General Motors Co. CEO and Chairman Mary Barra with the all-new Cadillac Lyriq, the luxury brand's first electric vehicle.

In a note this month to investors, Deutsche Bank Research Analyst Emmanuel Rosner wrote that GM should spin off the electric vehicle operations "into a stand-alone company which could force the market to recognize its robust EV technology and upcoming lineup and unlock considerable shareholder value."

Rosner asked GM CEO Mary Barra on the automaker's second-quarter earnings call about the potential for a spin off of the electric business:

"We are evaluating and always evaluate many different scenarios," Barra responded, "so I don't have anything further to say other than we are open to looking at and evaluate anything that we think is going to drive long-term shareholder value. So I would say nothing is off the table."

In a note this week to investors, Morgan Stanley's Adam Jonas wrote that with GM taking its battery capability in house, he values the automaker's  new Ultium battery business at $20 billion. GM currently is building a battery cell manufacturing complex with LG Chem in northeast Ohio. The investment is expected to lower the cost of battery manufacturing for GM and electric vehicles for the consumer.

Jonas used the earnings call to ask Barra if she would consider changing the company's name to Ultium Motors. He also touted the potential positives for a spinning off the company's EV operation: "In short, we believe GM faces an important decision related not just to Ultium but other industry-leading assets hidden in the company that may be finally ready to run out from under the corporate umbrella to go dancing in the rain. Sure there are risks. And if GM doesn't take the risk, then someone else surely will."

General Motors reveals its all-new modular platform and battery system, Ultium, Wednesday, March 4, 2020, at the Design Dome on the GM Tech Center campus in Warren, Michigan.

But at the Wednesday event GM President Mark Reuss said: "Simply put, this is a huge opportunity for us. The biggest opportunity any of us has ever seen for this company, certainly. It represents a chance to reinvent the company and reset our brands. It will change this company, and people's perceptions of it, forever."

GM is transitioning its idled Detroit-Hamtramck Assembly Plant into the automaker's first all-electric production site, with the GMC Hummer EV expected to arrive late next year. The Cruise Origin, an autonomous electric shuttle, also will be built at the Detroit plant. 

GM recently unveiled the Cadillac Lyriq, the luxury brand's first all-electric vehicle. The crossover will debut first in go on sale in China and hit U.S. dealership in late 2022. 

In China, where emissions standards are more stringent than in the U.S., more than 40% of GM’s new launches in China in the next five years will be electrified models. GM has not said what percentage of its U.S. launches will be electric. 

Also in China, by 2022 5G will be available on all new Cadillac models and most Chevrolet and Buick vehicles going forward. But GM hasn't confirmed what other markets will have access to 5G connectivity. 

“As GM’s largest market and a global center of innovation, China will play a crucial role in making our vision a reality,” Barra said in a statement. “With our joint venture partner SAIC, we are blending global insights and scale with local market expertise to redefine what is possible for our customers and for society.”