General Motors CEO Mary Barra took another step on Wednesday from divesting its nascent battery business for electric vehicles.
Keeping the unit within GM will create more value for the company than divesting it, Barra said.“For an electric vehicle, it’s all about the battery,” she said in an interview on “Squawk on the Street.
” “I think keeping that technology close and leveraging the deep battery expertise we have at General Motors is how we’re going to accelerate that value creation.
” Barra praised the company’s plans to sell its Ultium battery cells and its Hydrotech fuel cell technology to other companies.
It currently has a deal with Honda Motor for two EVs and this week announced the signing of a memorandum of understanding for GM to develop and supply its Ultium battery and Hydrotec systems for Wabtec freight locomotives.
Jim Cramer told Barra that he thought the battery business could be worth more than the entire automaker, which currently has a market cap of nearly $90 billion.
He wondered why investors should not be allowed to buy into the battery sector. GM does not currently manufacture its own battery cells for EVs.
It has announced plans to build four plants for such production by 2025, including two currently under construction in the US through a joint venture with LG Chem.
Speculation and pressure from Wall Street about a possible spin-off from GM’s electric vehicle business has been rampant for some time. Deutsche Bank has said that such a company is likely to be valued at a minimum of $15 billion to $20 billion, and could possibly be worth up to $100 billion.
GM President Mark Reuss said in November that the Detroit automaker was analyzing the potential of a spin-off and determined it wouldn’t be the right thing for his company.
He cited the cost of a spin-off and the benefits of having the EV business part of the larger company as reasons why it doesn’t make sense at this point.