General Motors has quietly gained momentum on competitors and still trades at a screaming value.
The automotive industry may be undergoing the most exciting evolution in its history with the advancements of driverless vehicle technology, vehicle-as-a-service, and electric vehicles (EVs) taking over the road from their gasoline-powered predecessors.
When it comes to one key metric, General Motors (GM 0.34%) just overtook Ford Motor Company (F 0.09%) and did so pretty significantly. Let’s see what that could mean for investors.
What have you done for me lately?
More broadly speaking, the U.S. new light-vehicle market jumped 12% in October with strong retail growth driving the sales numbers. October was a nice change of pace for investors who had dealt with mostly disappointing numbers.
For Ford investors, the change of pace wasn’t so great when it comes to the company’s position at No. 2 for EV sales in the U.S. market. Ford sold 6,264 EVs in October, an 8.3% decline from the prior year, and 23,509 EVs during the third quarter. It was a pace nowhere near enough to rival crosstown automaker General Motors, which posted a record 32,095 EV sales during the third quarter. GM’s third-quarter EV sales were up 60% year over year and 46% compared to the second quarter of 2024.
“GM’s EV portfolio is growing faster than the market because we have an all-electric vehicle for just about everybody, no matter what they like to drive,” said Rory Harvey, GM executive vice president and president of global markets, in a press release.
The great news for GM investors is that more than 50% of EV buyers are new to the automaker. General Motors is also working diligently to improve profitability and noted that updated internal combustion engine vehicles are more profitable than outgoing models because of initiatives to reduce price and simplify options. In fact, zeroing in on EVs, GM expects to narrow losses on EVs by $2 billion to $4 billion in 2025.
General Motors overtaking Ford for second place in EV sales during the third quarter puts the cherry on top of a strong performance. GM was first in U.S. sales with nearly 660,000 third-quarter deliveries, driven by nine consecutive quarters of year-over-year retail sales gains. GM grew U.S. market share during the third quarter with above-average pricing, well-managed inventories, and below-average incentives, and its situation in China improved from the second quarter.
What it all means
General Motors overtaking Ford for the second best-selling EV maker in the U.S. market is just the latest sign of the Detroit juggernaut’s growing momentum, which can be clearly seen in the stock chart below.
GM data by YCharts
Right now General Motors is doing a lot of things right. It’s returning massive value to shareholders through billions of dollars in share buybacks and dividend payments, it’s making more profitable vehicles and drastically reducing costs on EVs, and it’s focused on a potential driverless future with its Cruise operations.
It’s also worth noting that even after GM’s surge in 2024, the stock still trades at a paltry price-to-earnings ratio of 5.8 — making it a screaming value right now. General Motors may have overtaken Ford in much more than just EV sales. It may now be the premier Detroit automaker to invest in today.
Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
