Shares of automaker General Motors Co. (NYSE:GM) rose sharply after a Deutsche Bank analyst speculated that the company could spin off its electric-vehicle unit to create value.
The stock closed up 7.7% at $30.01 U.S. a share – its biggest one-day jump since May 18 and its highest close since June 8. That came after Deutsche Bank’s Emmanuel Rosner wrote in a report published Monday that the automaker could be worth as much as $93 U.S. a share if GM spins out its electric-vehicle business.
GM has said it is considering such a move, reviving an idea first considered two years ago. A spokesman declined to comment beyond referring to the remarks of GM Chief Executive Officer Mary Barra. When asked about the possibility on a July 31 second-quarter earnings call, Barra didn’t dismiss the idea, saying "nothing is off the table," though the company has said nothing about preparing for it.
GM does plan to sell more than 20 electric vehicle models by 2023. That business could be spun off for $20 billion U.S. and eventually be worth as much as $100 billion U.S., the Deutsche Bank report said. GM’s stock is down 18% so far this year. By spinning off its EV business, GM could get the kind of momentum enjoyed by rival Tesla (NASDAQ:TSLA) and a handful of start-up companies that have lured capital despite having no vehicles on the market.
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