General Motors (GM) stock has lost almost half its value in 2022. Its latest announcement could help get its share price unstuck.
The maker of both internal combustion-powered and electric vehicles (EVs) is collaborating with EVgo (EVGO) and the Pilot Company to install 2,000 charging stalls at Pilot and Flying J travel centers across America.
“GM is committed to creating an all-electric future for all. This collaboration with Pilot Company and EVgo will help make that future a reality by significantly expanding access to highway charging from coast-to-coast in the U.S.,” said Alex Keros, GM Director of Charging Infrastructure Development. “The corridor-focused project also complements our existing work with EVgo, including our efforts to add more than 3,250 fast chargers in U.S. cities and suburbs by the end of 2025.”
GM's latest move is proof that it’s serious about its EV plans.
Is it enough to make General Motors a buy? Or is there a better way to play the latest news about America’s expanding network of EV chargers? I’ll answer both questions.
GM Stock Is a Buy
The plan is to install 2,000 fast chargers at 500 Pilot and Flying J travel centers in 50-mile increments across the U.S. The 2,000 fast chargers should be in place by the end of 2023. GM is spending $750 million to build a fast-charging network in the U.S. EVgo will install, operate, and maintain the fast chargers.
GM CEO Mary Barra stated about the EVgo eXtend project:
“We are committed to an all-electric, zero-emissions future, and ensuring that the right charging infrastructure is in place is a key piece of the puzzle,” said GM CEO Mary Barra in a statement. “With travel centers across North America, Pilot Company is an ideal collaborator to reach a broad audience of EV drivers.”
While the fast chargers are open to any EV compatible with EVgo’s fast chargers, GM needs to take a leadership position in growing America’s charging network. The last thing it wants is for its EV owners to be stranded in some desolate location. This project helps ensure it doesn’t happen.
In addition to this project, GM is working with its dealers in the U.S. and Canada to install as many as 40,000 chargers in “underserved rural and urban areas” in both countries.
Bank of America’s “Car Wars” study suggests that GM and Ford (F) should pass Tesla (TSLA) in annual EV sales by 2025. BofA believes Tesla’s market share will fall from 70% today to 11% over the next three years. Ford and GM’s market share could be 15% by 2025.
“He [Elon Musk] had tremendous hubris that they would never catch him, they would never be able to do what he's doing, and they're doing it,” The Detroit News reported of BofA analyst John Murphy’s comments.
GM is spending $35 billion on EVs and autonomous vehicles by 2025. At that time, GM is expected to have the most EV sales in the U.S.
Down almost 50% YTD, the risk/reward on GM stock is currently tilted in your favor.
There Is Another Option
I recently discussed how Elon Musk gave investors another reason to buy Berkshire Hathaway (BRK.B). It had to do with BYD (BYDDY) -- a Berkshire equity holding worth $8.4 billion -- passing Tesla in new energy vehicles produced in the first half of 2022.
GM is another automobile manufacturer whose stock is owned by Berkshire. It holds 4.3% of GM, a stake worth 0.6% of Berkshire’s $317 billion equity portfolio. Warren Buffett upped his GM stake in the first quarter by 3%, or 1.8 million shares.
In addition to GM, Berkshire owns a 38.6% interest in Pilot. In 2023, it will acquire an additional 41.4% interest, giving it majority ownership (80%) of the travel center operator. The founding Haslam family will retain a 20% stake in the company.
The only thing Berkshire doesn’t own are shares in EVgo. If it did, it would have a trifecta for growth.
A big reason for owning Berkshire stock, other than its GM and Pilot investments, is that you get a tiny stake in one of the world’s largest investment funds without paying any management or performance fees. That in itself makes Berkshire an excellent investment.
In addition, it’s a pretty good defensive position in 2022. It’s down 9.4% YTD, 786 basis points better than the Dow Jones Industrial Index, and 128% better than the S&P 500.
Buying Berkshire gives you a big play on EVs while also benefiting from higher oil prices through its 8.1% stake in Chevron (CVX) and 18.7% ownership of Occidental Petroleum (OXY). Buffett’s playing both sides of the coin.
Is GM a buy after its latest announcement? I think it is. However, if you’re at all risk-averse, BRK.B is a much better way to play GM, in my opinion.
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