GM Ups EV Game But Won't Bow To Wall Street Demands To Spin-Off Unit

General Motors Company 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 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 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.

The automaker has plans to spend $27 billion on all-electric and autonomous vehicles through 2025, a 35% increase over the $20 billion it announced in March. 

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.