GM Overtakes Ford in EV Sales: Is the Stock a Buy?

General Motors (GM) has made a significant stride in the electric vehicle (EV) market by overtaking Ford in US EV sales during the third quarter of 2024. This achievement raises the question: does this metric make GM's stock a buy? To answer this, let's analyze GM's recent performance, its EV strategy, and the implications for its stock.
GM's diverse EV portfolio has been a driving force behind its success in the market. With models like the Chevy Equinox, Cadillac Lyriq, and electric pickups GMC Hummer EV and Chevy Silverado EV, GM has catered to a wide range of consumers, driving demand and market share. Ford, on the other hand, has struggled with production issues and a less diverse EV lineup.
GM's achievement has significant implications for its future market share and profitability in the EV sector. With EV prices coming down, GM's profitability in the EV sector is expected to improve as volume increases. However, GM still trails Tesla significantly in EV sales, highlighting the need for continued innovation and price reduction to maintain its competitive edge.
Analysts' price targets and recommendations for GM stock reflect a positive outlook, with an average target of $58.91, predicting a 5.99% increase from the current price of $55.58. Nineteen analysts have a "Buy" rating, indicating confidence in GM's future performance. This optimism is likely influenced by GM's recent achievement of overtaking Ford in US EV sales, demonstrating the company's growing competitiveness in the electric vehicle market.

GM's strategic moves to maintain its lead in EV sales include expanding its portfolio with affordable models like the Chevy Equinox, luxury EVs such as the Cadillac Lyriq, and electric pickups like the GMC Hummer EV. Ford, to challenge GM, has a "skunkworks" team in California developing a low-cost platform. However, GM's president, Mark Reuss, took a shot at Ford, saying, "We don’t need to create a skunkworks to create affordable electric vehicles. We know how to do this."
GM's investment in charging infrastructure and partnerships has also impacted its EV sales and market position. By 2024, GM expects to have over 40,000 fast chargers in the US, a 10x increase from 2021 (Source: GM). This expansion, coupled with partnerships like Ionity and EVgo, has improved EV accessibility, driving GM's EV sales.

In conclusion, GM's overtake of Ford in US EV sales is a notable achievement that reflects the company's strategic approach to the electric vehicle market. However, investors should exercise caution and consider the broader competitive landscape, as well as potential market fluctuations and valuation concerns. While GM's progress is commendable, its stock may not be a guaranteed buy due to the dynamic nature of the EV sector and the need for continued innovation and price reduction to maintain market share.