General Motors unveiled its brand new Ultium modular platform and battery system on March 4, 2020 at its Tech Center campus in Warren, Michigan.
Photo by Steve Fecht for General Motors
General Motors boss Mary Barra on Wednesday pushed back the spin-off of the emerging battery business for electric vehicles.
Remaining the unit with GM will add more value to the company than the spin-off, Barra said.
“An electric vehicle is all about the battery,” she told CNBC’s “Squawk on the Street.” “I think we will accelerate that value creation if we keep this technology close by and leverage General Motors’ extensive battery expertise that we have.”
Barra announced the company’s plans to sell its Ultium battery cells as well as its Hydrotech fuel cell technology to other companies. GM has signed a contract with Honda Motor for two electric cars. The company also announced this week that it had signed a letter of intent for GM to develop and supply its Ultium battery and Hydrotec systems for Wabtec freight locomotives.
CNBC’s Jim Cramer told Barra he believed the battery business may be worth more than the entire automaker, which currently has a market cap of nearly $ 90 billion. He asked why investors are not allowed to buy into the battery business.
GM does not currently produce its own battery cells for electric vehicles. The company has announced plans to build four plants for such production by 2025, including two currently in the US through a joint venture with LG Chem.
Speculation and pressure from Wall Street about a possible spin-off of GM’s electric vehicle business have been rife for some time. Deutsche Bank has said that such a company is likely to be worth at least $ 15-20 billion and could potentially be worth up to $ 100 billion.
GM President Mark Reuss said in November the automaker had analyzed the potential of a spin-off and determined that it wasn’t the right move for its business. He cited the cost of outsourcing as well as the benefits of having the EV operations part of the larger company.
