Ultium Battery And Autonomous Mobility Will Redefine Transportation

AN
AnalystHighTarget
AnalystHighTarget
Not Invested
Consensus Narrative from 28 Analysts
Published
10 Apr 25
Updated
16 Jul 25
AnalystHighTarget's Fair Value
US$77.30
36.8% undervalued intrinsic discount
16 Jul
US$48.89
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1Y
5.4%
7D
-7.2%

Author's Valuation

US$77.3

36.8% undervalued intrinsic discount

AnalystHighTarget Fair Value

Last Update07 May 25
Fair value Decreased 9.02%

AnalystHighTarget made no meaningful changes to valuation assumptions.

Key Takeaways

  • Cost discipline in EV and battery production, plus domestic supply chain strength, will drive margin expansion and greater stability across ICE and EV segments.
  • Software innovation, advanced autonomy, and connected services position GM for high-margin, recurring revenue, transforming its future business model and profitability.
  • Shifting regulations, demographic changes, global competition, and capital-intensive EV transition pose significant risks to GM’s margins, revenues, and long-term profitability.

Catalysts

About General Motors
    Designs, builds, and sells trucks, crossovers, cars, and automobile parts worldwide.
What are the underlying business or industry changes driving this perspective?
  • GM’s disciplined approach to scaling electric vehicle (EV) production while focusing on cost reduction across the Ultium battery platform and broadening domestic battery manufacturing is expected to drive margin expansion and greater profitability as EV adoption accelerates over the next decade, supporting robust long-term earnings growth.
  • The rapid ramp of Super Cruise and the next-generation software-defined vehicle platform is positioning GM to capture high-margin, recurring revenue from connected vehicle services and features, increasing overall net margins as more of its fleet becomes monetizable through software upgrades and subscriptions.
  • Commercialization of advanced autonomous driving technology—through ongoing investments in Cruise and expansion of personal autonomy features—opens significant new revenue streams from autonomous mobility and ride-hailing, potentially transforming GM’s business model and driving outsized EBITDA growth beyond core vehicle sales.
  • Strengthened U.S. manufacturing and a resilient domestic battery/raw materials supply chain, in preparation for new regulatory and tariff environments, gives GM significant flexibility to expand production and market share in both ICE and EV segments, improving revenue stability and pricing power relative to global competitors.
  • AI-driven manufacturing efficiencies, robotics implementation, and supplier collaborations are expected to further reduce per-unit production costs and streamline product launches, sustaining or increasing operating margins and boosting long-term free cash flow to capitalize on global growth in personal and fleet mobility solutions.

General Motors Earnings and Revenue Growth

General Motors Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • This narrative explores a more optimistic perspective on General Motors compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
  • The bullish analysts are assuming General Motors's revenue will grow by 2.1% annually over the next 3 years.
  • The bullish analysts assume that profit margins will increase from 4.0% today to 6.2% in 3 years time.
  • The bullish analysts expect earnings to reach $12.4 billion (and earnings per share of $14.37) by about May 2028, up from $7.6 billion today. The analysts are largely in agreement about this estimate.
  • In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 6.7x on those 2028 earnings, up from 5.8x today. This future PE is lower than the current PE for the US Auto industry at 13.9x.
  • Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 11.41%, as per the Simply Wall St company report.

General Motors Future Earnings Per Share Growth

General Motors Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • The accelerating pace of global climate regulation and emission standards, particularly in key markets like Europe and China, could force GM to invest heavily in compliance and phase out profitable ICE vehicles sooner than planned, squeezing margins and undermining long-term earnings power.
  • Demographic shifts and increasing urbanization are leading to declining rates of car ownership among younger consumers, which threatens to shrink GM’s addressable market and could result in sustained pressure on overall revenues.
  • Despite some near-term gains, GM continues to experience underperformance and market share losses in critical international regions such as China, where competition is intensifying from domestic brands and EV-focused entrants, creating risk for international revenues and EBIT growth.
  • The transition to electric vehicles remains capital intensive, and while the company reports progress on cost reductions and U.S. battery supply, the uncertainty around broad consumer EV adoption and the need for further investment make it likely that free cash flow and margins will remain constrained in the medium term.
  • Intensifying competition from low-cost global EV manufacturers, particularly Chinese brands, heightens the risk of price wars and discounting in both North America and overseas markets, which could erode GM’s pricing power and compress sector-wide net margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

  • The assumed bullish price target for General Motors is $77.3, which represents two standard deviations above the consensus price target of $54.39. This valuation is based on what can be assumed as the expectations of General Motors's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  • However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $83.0, and the most bearish reporting a price target of just $34.0.
  • In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $200.5 billion, earnings will come to $12.4 billion, and it would be trading on a PE ratio of 6.7x, assuming you use a discount rate of 11.4%.
  • Given the current share price of $45.46, the bullish analyst price target of $77.3 is 41.2% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystHighTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystHighTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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