To wit: Even stock market hawks like CNBC’s frequently-yelling-at-the-camera Jim Cramer is on the EV train, and commented this week that he had a “mind-changing epiphany” about General Motors’ fortunes when his wife called to his attention a video of the new Hummer EV doing the crab walk. If you’re at all familiar with Cramer, you know he’s easily excited and prone to hyperbole. This statement even caught me by surprise, however:
“Candidly, I have warned people off this stock since 15 years ago. I didn’t like the first iteration of GM, before its bankruptcy. I didn’t like the second iteration, either, the one that eliminated its 38 cent dividend this past April,” Cramer said. “So this morning, when the company reported, I did something I haven’t done in ages. I didn’t wait until I got home to hear the conference call. What I heard was something that made me think, wait a second, stop it with the prejudice. This company is making a ton of money, it has an incredible SUV lineup, it is taking market share and it’s more deeply involved with electric vehicles and even hydrogen, which is my fascination, given how much natural gas we have in this country. Not only that, its business in China’s on fire, and that’s the country you want to be on fire in.”
A few years ago, GM presented its future plans and Wall Street yawned widely outside a few acknowledgements that it was trying something different. Ho hum. Just a century-old automaker trying to be relevant. In early March, at literally the worst possible moment, GM announced a wildly ambitious plan to go 100 percent electric on the back of a new modular platform and revolutionary battery tech. Its stock fell by almost 20 percent over the following week. Now? It’s a new climate.
So, the big-engine-that-could didn’t give up, and its high-profile launch of the Hummer seems to be turning heads and changing minds. The ugly duckling is becoming a swan before our eyes, and while it hasn’t completed its metamorphosis, GM is definitely making visible changes—even if it hasn’t actually built a complete, working prototype of the Hummer EV yet. That doesn’t matter to investors as much these days, at least when we’re talking about companies with double-digit stock prices.
In July, CNBC reported that shares of Tesla gained 5 percent to hit a new all-time high, and yesterday it was trading at $429.95 (GM was at $37.47 and Toyota $139). Tesla’s valuation sits at roughly $206.5 billion, compared with Toyota’s valuation of about $202 billion. Toyota is the world’s largest automaker by volume.
Hold the phone, though, because Toyota President Akio Toyoda has something to say in typical Akio style. Yesterday during an earnings call, Toyoda said his company could learn from Tesla’s success with investors, and its business model. But he went on to compare Tesla to a restaurant still perfecting its model, while Toyota is an established venue with a proven recipe.
“I am hesitant to say this — Tesla’s business, if you want to use the analogy, is like that of a kitchen and a chef,” Toyoda said. “They have not created a real business in the real world yet. They are trying to trade recipes. The chef is saying ‘Our recipe is going to become the standard of the world in the future!’ At Toyota, we have a real kitchen and a real chef too, and are creating the dishes already. There are customers, who are very picky about what they like to eat, sitting in front of us, and eating our dishes already.”
In a competitive market with decreasing cash flow, not all of these EV startups are going to make it. Most won’t—may the odds be ever in their favor. Nikola’s disastrous response to allegations of fraud around its prototype electric semi-trucks this fall shows just one of the perils that lie ahead.
I have my eye on Rivian, though. The company has partnerships with Ford and Amazon on the books and has made some high-profile treks to prove its truck’s real-world viability, like the recent Rebelle Rally and Ewan McGregor’s motorcycle docuseries Long Way Up. It’s not a public company but funding is still rolling in, and it will be interesting to see where it goes.