GM Announces Major Electric Vehicle Plan

GM Announces Major Electric Vehicle Plan

The biggest automobile manufacturer in the US, General Motors Company (NYSE: GM), reported a better than anticipated second-quarter non-GAAP earnings of $2.876 billion or $1.89 per share. However, the company’s 2Q17 revenues of $36.984 billion were below the Street estimates. The cyclical slowdown in the US automobile industry and the mixed results kept the stock range bound between $34 and $36 in August. However, a 12% y-o-y increase in September sales to 279,397 units triggered a rally in the stock, which recorded a new 12-month high of $45.33. Furthermore, the efforts put forth by the company to grab a major share of the electric car market and investments in hydrogen fuel cell technology indicate that the uptrend will continue in the week ahead.

The Detroit-based automaker announced that it will bring out two newly designed, fully electric vehicles in 2019. Furthermore, the company stated that it has plans to introduce 23 more electric vehicles by 2023. The announcement is noteworthy in the sense that General Motors is the largest automobile manufacturer, which has sold about 10 million vehicles last year. The company has not set a date to end the manufacturing of gas-powered vehicles. However, it expects the transition to happen gradually. Both China and India have announced plans to ban sales of gas-powered vehicles after 2030. Likewise, in Europe, France, Netherlands, UK and Norway have also expressed their willingness to put an end to fossil fuel based vehicles. General Motors sell more vehicles in China than in the US. So, the announcement is of vital importance.

The two new cars, slated to be introduced in 2019, will be based on Bolt EV’s technology. Furthermore, they will be either a plug-in electric vehicle or hydrogen fuel-cell vehicle without any internal combustion engine. The electric sedan Bolt EV, having a range of 238 miles, was introduced by Chevrolet last year. General Motors also revealed that it is developing a new fuel-cell architecture that could drive a heavy-duty truck, ambulance or a delivery vehicle.

With its hydrotec fuel-cell system, the company is aiming to offer a solution for transportation problems caused due to conflicts, logistics issues, and natural disasters. In this regard, the company displayed an adaptable fuel-cell electric platform, known as SURUS (Silent Utility Rover Universal Superstructure, in the AUSA (Association of the US Army) event held between October 9 and October 11. The zero emission SURUS, with its autonomous capability, will assist in reducing logistic issues and increase human safety.

On Monday, the company announced that it has acquired Strobe Inc., which uses LIDAR technology to assist autonomous driving cars identify distant objects. The technology will also enable GM to reduce cost and improve a self-driving vehicle’s overall capability.
On the basis of these developments, the Bank of America has upgraded the rating of GM to “buy”, from “neutral”, with a target price of $57. Thus, fundamentally, it would be wise to buy the stock on dips.

The stock has made an upside break out, as shown in the image below. The Chaikin money flow is positive, while the MACD indicator is making new highs. Thus, we expect the stock to remain bullish in the short-term.

General Motors - Technical Analysis - 12th October 2017

To capitalise on the bullishness, we are looking for a call option offered by a binary broker. The option should fulfill two basic conditions. Firstly, it should be active for a week. Secondly, the stock should be trading at about $45 at the time of investment. We would trade the uptrend, if those conditions are satisfied.

Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.

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