How GM is lapping Tesla, in seven charts

What if I told you the star of the automotive industry was not the semiautonomous electric-car-maker whose stock is known as one of the “Magnificent Seven,” whose CEO also runs a space company and tries to implant scientific devices in people’s brains — but rather, it’s the company that debuted a bitchin’ muscle car known as the Camaro in 1966?

Turns out, General Motors has looked more like a growth stock over the past year than Elon Musk’s Tesla. Don’t believe me? Check this out: 

For years, Tesla’s stock pushed ever higher as investors and fanboys banked on Musk and his ability to disrupt the auto industry. It’s up after-hours today after investors got an earnings report that beat Wall Street’s expectations.

But as some of the shine has come off of EVs and a lot of the shine has come off Musk, some of the shine has come off Tesla, too. 

Now, Tesla is continuously losing market share. It’s resorting to old-school dealership tactics to drive sales, like repeated offers of 0% financing for new purchases and good old-fashioned ads. It has rolled out free Full Self-Driving trials to Tesla owners at least twice in recent months, trying to reel them into eventually paying for the product while presumably also trying to add to the trove of data it uses to train its cars’ autonomy. 

As Tesla sales have faltered, Musk has also scrambled to reassure investors that the crazy high-valuation multiples they’ve ascribed to the stock should stick: “We should be thought of as an AI-robotics company,” he said earlier this year. 

Here are those price-to-expected-earnings multiples for Tesla compared to GM. (Tech companies typically trade at higher multiples of expected earnings. And sometimes a higher ratio can be interpreted as a stock being overvalued.) 

While Tesla has been mostly flailing and its stock is flat for the year, GM has been on a roll — its stock is up more than 80% in the past year and has nearly doubled off the lows it hit in November of last year. Why? The company is nailing it on pricing and the sales mix of gas, hybrid, and electric vehicles. Its revenue is rising like it’s a growth company — how many 116-year-old entities do you know that are growing their revenue 10.5% from a year ago, especially in an environment where consumers complain their wallets are being squeezed?

In the earnings report it released yesterday, GM produced nearly double the adjusted free cash flow that analysts were expecting. And what does cash let you do? As a company, you could spend it on R&D or capex or you could buy back stock — and GM has bought back about $20 billion of it over the past two years. What do stock buybacks do? Push up your stock price, of course.

It’s worth noting here that it’s admittedly pretty remarkable Tesla has built itself into the behemoth it is. This is a company that hasn’t existed all that long, but it still produces about half the revenue and profit GM does regularly. 

As much as Musk wants to will his car company into something more grand, at least for now, the company derives most of its profit from selling cars. And it’s not doing that better than GM.

Tesla had a huge first-mover advantage in EVs because it basically forged the electric-car business into reality. That’s very cool! But it sure seems to be losing a step, and GM is catching up. GM said on its earnings call yesterday that it has captured a nearly 10% share of the EV market. Meanwhile, Tesla is trending downward, dipping under 50% for the second quarter in a row.

Unless some of its moon-shot bets — like autonomous robotaxis and humanoid robots — pay off, Tesla may remain stuck in neutral.