General Motors' Stock Valuation: RBC's Bold Upgrade and the Road Ahead for Investors

In October 2025, RBC Capital made a striking move, raising its price target for General Motors (GM) to $77-a 20% jump from its previous estimate-while maintaining an "Outperform" rating. This upgrade, the third in 2025 alone, underscores a growing consensus among analysts that GM is navigating a pivotal inflection point in its transformation toward electrification and cost efficiency. For investors, the question is no longer whether GM can survive the transition to electric vehicles (EVs), but whether the stock's current valuation reflects its potential to outperform peers in a rapidly evolving market.

Strategic Reinvention: From Robotaxis to EVs

RBC's optimism hinges on GM's strategic realignment. In 2025, the company shifted focus from its Cruise robotaxi venture to a more aggressive EV production strategy. This pivot has allowed GM to redirect capital toward its Ultium battery platform, a cornerstone of its competitive edge. According to an EV Magazine report, GM's collaboration with LG Energy Solution and plans for a joint venture with Samsung SDI are scaling U.S. battery production while reducing costs through prismatic cell technology and lithium iron phosphate (LFP) chemistry. These innovations are projected to cut battery pack costs by up to $6,000 per vehicle, a critical advantage in a market where price sensitivity is intensifying, according to a market valuation analysis.

The results are already materializing. GM's EV sales surged 60% in Q3 2025 compared to the previous quarter, with the Chevrolet Equinox EV accounting for nearly one-third of total EV sales, according to an EV News Daily report. This momentum has propelled GM to the second-largest EV seller in the U.S., trailing only Tesla but outpacing Ford. Analysts at RBC note that GM's ability to attract new customers-50% of Q3 EV buyers were first-time GM customers-signals a broader appeal for its electric lineup (the EV News Daily piece cited above also highlights this shift).

Financial Resilience Amid Tariff Headwinds

GM's Q3 2025 earnings, released in October, further solidified RBC's bullish stance. The automaker reported adjusted earnings per share (EPS) that exceeded Wall Street expectations, despite a 57% decline in net income attributable to stockholders compared to 2024. This discrepancy reflects GM's proactive approach to mitigating tariff impacts, which are now projected to cost $3.5–$4.5 billion for the year-down from earlier estimates-and offset by 35% through cost controls.

RBC analysts highlight GM's ability to balance short-term challenges with long-term gains. For instance, the company has paused some all-electric transitions at certain plants to align production with realistic demand forecasts, a pragmatic adjustment that preserves cash flow while maintaining its EV leadership, according to a Monexa analysis. This flexibility, combined with a $7 billion annual R&D investment in U.S. battery technology, positions GM to outperform peers in both cost efficiency and innovation (see market valuation analysis cited earlier).

Valuation Metrics: A Contrarian Opportunity?

GM's stock currently trades at a steep discount relative to its peers. As of Q3 2025, its P/E ratio of 6.93 is less than half the industry average of 14.1X. Similarly, its price-to-sales (P/S) ratio of 0.29 lags far behind the EV sector's 9.4X average. These metrics suggest that investors are underestimating GM's EV-driven growth potential, particularly given its 9.5% U.S. EV market share in Q3 2024-a figure that RBC expects to rise as battery costs decline (the EV News Daily report referenced above provides additional context).

The disconnect between GM's valuation and its fundamentals raises a compelling question: Is this a buying opportunity for long-term investors? RBC's $77 target price implies a 44% upside from GM's October 2025 closing price of $53.50, a premium that accounts for both near-term margin improvements and long-term EV market share gains (see the market valuation analysis cited earlier).

Investor Implications: Balancing Optimism and Caution

For investors, the key is to weigh GM's strategic and financial strengths against lingering risks. While the company's EV sales growth and cost-cutting measures are impressive, the U.S. EV market remains slower than anticipated, with competition from Tesla intensifying (see the Monexa analysis cited above). Additionally, GM's reliance on government incentives for EV adoption introduces regulatory risk, particularly if subsidies are reduced or phased out.

However, RBC's upgrades-and similar bullish forecasts from other analysts-suggest that these risks are already priced into GM's stock. The company's undervaluation, combined with its technological edge in battery production and supply chain localization, creates a margin of safety for investors willing to bet on its execution.

Conclusion

RBC's latest target price of $77 for GM reflects a conviction that the automaker is not just surviving the EV transition but thriving. By prioritizing cost efficiency, scaling battery production, and adapting to market realities, GM has positioned itself as a leader in a sector where differentiation is key. For investors, the challenge lies in recognizing that GM's current valuation may not yet reflect its full potential-a gap that could close as EV adoption accelerates and the company's innovations gain traction.