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Why Tesla Stock Jumped Monday

By Daniel Sparks - Updated Nov 26, 2018 at 4:15PM

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General Motors' urgent restructuring endorses Tesla's aggressive bets on the electric vehicle market.

What happened

Shares of electric-car maker Tesla (TSLA -4.51%) jumped on Monday. Shares finished the trading day up 6.2%.

The stock's gain comes amid an overall bullish day for high-growth tech stocks. But another factor driving the stock higher may be news that General Motors (GM -1.63%) is planning a major restructuring that involves slashing costs and reducing its workforce in an effort to streamline profitability and double-down on its electric autonomous vehicle investments.

A production line at Tesla's factory in Fremont, CA

Tesla factory. Image source: author.

So what

General Motors' restructuring suggests the company believes electric vehicles will be a big part of the future. Coming from the world's largest automaker, this helps support the bull case for the ongoing strong growth in the electric vehicle market that Tesla investors are betting on.

While many companies have committed to building out their lineup of electric vehicles, General Motors has been particularly aggressive on this front. But now GM says that, as part of its cost actions and optimization of its capital expenditures, its "[r]esources allocated to electric and autonomous vehicle programs will double in the next two years."

Now what

The bottom line is that General Motors is making a major commitment to battery electric vehicles, endorsing a future that Tesla has been betting on for over a decade.

"GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures," General Motors said in its press release on Monday. "As the current vehicle portfolio is optimized, it is expected that more than 75 percent of GM's global sales volume will come from five vehicle architectures by early next decade."

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Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
$34.06 (-1.63%) $0.56
Tesla, Inc. Stock Quote
Tesla, Inc.
$701.65 (-4.51%) $-33.11

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