GM is about to surprise everyone

The one question for clarification on this presentation - can anyone expand on the comment that they make more than 100% of their profit in trucks? Does this mean they're losing money in all other categories, or is there a specific drain?

Hi James. To be more specific, GM makes more than 100% of its automotive profit from trucks (i.e. SUVs). In other words, the car/sedan business is, we believe, loss making, although the company does not always break it out cleanly. This is an important consideration as the 'truck' business has a much more favourable industry structure being, essentially, a 3-player market made up of GM, Ford and Fiat Chrysler (Jeep) rather than the very competitive car market. The truck business is also much less exposed to potential threats, such as autonomous driving, as trucks are often bought for both work and play, and much of the truck business is in less population dense rural and semi-rural markets in the middle of the US. GM is also making a big push into electric vehicles, kicking things off with the recent relaunch of the Hummer as a 100% electric vehicle, and plans to launch 30 new EV vehicles by 2025. GM's market share is much lower in the major EV markets, which are coastal (for example, California) so the company has a great opportunity to increase overall market share by launching new EVs in markets in which its market share is low, thereby reducing cannibalisation, while its strong market share/truck heavy areas are more protected. Despite the share price rising 50% since the relaunch of the Hummer two months ago, GM still trades at <8x FY2021 expected EPS.