Our $ 2 billion deal with Nikola validates our electric vehicle technology

Mary Barra

With one major deal with a buzzing electric truck startup Nicola, GM Chairman and CEO Mary Barra has likely finally gained a key element among the Wall Street community.

He deserved a lot respect For an advanced electric vehicle platform.

Nikola Corporation (NKLA) announced Tuesday that it has chosen GM (GM) as its manufacturing partner for its small electric truck, dubbed the Badger. Badger will use General Motors’ widely known Ultium battery technology. Additionally, Nicola will hand over $ 2 billion in equity to GM – giving the automaker an 11% stake in the company. An additional wrinkle is equally important: GM battery technology and hydrogen fuel cells will be used in commercial Nikola trucks.

Shares of Nikola and General Motors rose 40% and 8%, respectively, on the merger.

“We see this a very important day because it validates our technology, be it electric battery technology or our fuel cell technology,” Parra told Yahoo Finance The First Trade.

So far, the street has arguably been unwilling to grant GM any certification of its EV technology. Despite strong performance metrics for GM’s Ultium technology and plans to launch more than 20 new electric vehicles by 2023, GM’s stock fell about 16% last year. This is in the face of a meteoric rise in Tesla shares (up 683%) and Nicola’s public market debut this summer.

GM’s market value prior to the deal with Nikola was in a low zone of $ 40 billion while Tesla jumped to $ 332 billion.

This disconnect in the valuation led some on Wall Street – specifically analysts at Deutsche Bank – to ask Parra to spoil the EV business. Deutsche Bank recently estimated that GM’s electric vehicle business could be worth between $ 15 billion and $ 100 billion. Parra raised the speculation slightly on the company’s second-quarter earnings call, telling analysts that everything was “on the table” for increasing shareholder value.

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Barra remained open-minded in the interview with Yahoo Finance.

“Well, we are focused on creating long-term value. And I’ve always said that is our focus. We will do what is right for our shareholders,” Parra said. [deal with Nikola] It’s just the beginning of unleashing the value within the company. Also the ability that we have to engineer to obtain volume, especially when we look at electric cars in China as well as North America and just to continue building and the ability to demonstrate that we will be a very powerful player in the electric vehicle future. ”

Brian Susie He is a roaming editor and co-presenter First trade In Yahoo Finance. Follow Suzie on Twitter Embed a Tweet and on Linkedin.

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