GM Is Looking Pretty Jealously At Tesla And Nikola

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In recent months, Tesla’s soaring stock price has seemingly boosted startup Nikola, which was once valued as high as $26 billion despite having no revenue. According to a new report, GM might want to try and get in on that investor hype.

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That is in part because investors apparently don’t believe legacy car companies like GM can pull off an electric car. Even though GM already has, and is working on more, that hasn’t done much for its stock price, which is what GM’s CEO Mary Barra and its board cares about. GM thinks it’s doing—and has done—quite a bit in the electric space and getting no love on Wall Street in return.

And so now, Bloomberg reports, GM has been deliberating over whether or not to spin off its electric-vehicle operations. That new company would have a different name, none of the baggage of GM’s 111-year history, and, in theory, would also inspire more investment. In theory.

GM now is war-gaming the idea as the company ponders different ways to get credit for its EV plans, though a spinoff isn’t actively being prepared, said the people, who asked not to be identified discussing internal deliberations.

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The view within GM is that the startups attracting billions of dollars of investment have a fraction of the capabilities Barra touted back in February and March.

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This would maybe look much like what Tesla did and what Nikola is trying to do, which is to take the new company public and fund research and development through new investment from Wall Street. That’s a strategy that Lordstown Motors and Fisker are also pursuing. And clearly also a flavor-of-the-month kind of thing, but you get the feeling that Tesla is a bit of unicorn in this regard. It somehow pulled it off after years of walking on a tightrope, something that maybe looks easier than it was now that there is so much money getting thrown around.

News Editor at Jalopnik. 2008 Honda Fit Sport.

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DISCUSSION

I suspect GM will get their revenge when they continue with their relatively rational and competent product rollout over the next decade and the vaporware companies begin to fall by the roadside as few or none of them end up delivering on their lofty promises.

Once investors realize that not *every* electric startup is worth a multibillion valuation and that building cars is much harder than they seem to assume, some sanity will return.

It’s a tale as old as capitalism, or at least as old as pets.com