Traditional internal combustion engine (ICE) vehicle manufacturers like General Motors (NYSE:GM) have vastly underperformed their electric vehicle (EV) counterparts such as Tesla Inc. (NASDAQ:TSLA) for quite some time. Indeed, this performance discrepancy still exists today, and GM is worth much less than Tesla, on the basis of the respective companies’ growth outlooks long-term.
That said, shares of GM have been skyrocketing of late. This comes as the company is starting to be valued as an EV player rather than a traditional ICE automaker by the market.
This sentiment shift has come as a result of rather strong performance from GM in growing its EV market share. Investors and analysts are expecting continued outperformance in this market segment moving forward. The current valuation of Tesla makes the more established players like GM look absolutely dirt cheap in this regard.
Indeed, I’ve viewed GM as a deep value play for some time. I think traditional auto manufacturers continue to be significantly undervalued by the market on the basis of their growth potential in the EV market. Subsequently, I think EV-focused automakers like Tesla are extremely overvalued relative to their peers. This valuation discrepancy provides an interesting value thesis for picking up shares of GM which are still dirt cheap, in my view.
I think those looking for EV exposure need to look past companies like Tesla toward competitors with a real shot of gobbling up market share right now like GM.
Invest wisely, my friends.
