- Mizuho analyst Vijay Rakesh initiated coverage on General Motors Company GM with a Neutral rating and a price target of $39.
- The analyst applauds the company's consumer-commercial Electric Vehicle portfolio, which has an ambitious ramp of two million units per year globally by 2025. The company is expected to launch 30 new EVs globally by 2025.
- The company is ramping EVs in North America from 45,000 to one million units from 2022-2025, at a 200% CAGR.
- This apart, the company's multiple secular vectors with Advanced Driver Assistance Systems, or ADAS, Cruise Automation, and vertical battery supply chain via Ultium are expected to aid growth.
- New Vectors with Cruise ADAS target revenue generation of $50 billion by 2030, with Robotaxis, L3+, and other Content/Roadside Services.
- General Motors is also vertically integrating its battery supply chain with its Ultium platform, which could help lower costs and improve efficiency as it scales EV longer-term.
- The company is targeting battery cell costs reaching ~$87/kWh by 2025, down from ~$124/kWh today.
- During its planned ramp to the production capacity of one million EVs in North America by 2025, the company expects to see capex increase to $11 billion to $13 billion per year for 2023- 2025, as it transitions lines from ICE to EV and ramps battery production.
- However, the analyst cautions on slower growth globally, coupled with the softer consumer and ramp of low-margin EVs, which are expected to lead to broadly lower margins in the near term.
- Also Read: Tesla Shocks Auto Industry: Drives Past Mercedes-Benz, Toyota To Become World's Most Valuable Auto Brand
- Price Action: GM shares traded lower by 0.13% at $34.58 on the last check Thursday.
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