General Motors Is Gearing Up, but It's Still in the EV Slow Lane

Stock markets remained resilient on Wednesday, refusing to allow early declines to cascade into serious downward moves. The Nasdaq Composite (^IXIC 2.02%), S&P 500 (^GSPC 1.02%), and Dow Jones Industrial Average (^DJI 0.40%) were all down on the day, but percentage declines were limited.

Data source: Yahoo! Finance.

One area of the stock market that has attracted a ton of attention lately has been the automotive sector. On Wednesday, General Motors (GM 0.48%) added its latest news to the mix of companies vying for position in the innovative industry, particularly as it and many fellow manufacturers look to ramp up their own production of electric vehicles.

Although GM had solid sales during the second quarter, it's still lagging badly behind Tesla when it comes to EV volume. Here's more about GM's competitive position and what it means for the long-term prospects for the venerable automotive pioneer.

A good quarter for GM

Shares of General Motors finished the day up more than 1%. The Detroit-based car giant reported its sales numbers for the second quarter of calendar 2023, and investors were generally pleased with the trends they saw from the automaker.

GM sold just shy of 692,000 vehicles during the second quarter. That was up 19% year over year, and the automaker featured sales volume gains at all four of its key brands -- Buick, Cadillac, Chevrolet, and GMC.

On the retail side, General Motors saw sales rise 15%, posting the fourth consecutive quarter of gaining retail market share. GM's numbers on the fleet side of the business were even more impressive, as the automaker saw volume in its Envolve program jump 34% from year-ago levels.

Some other fundamental measures were also strong. Average transaction prices climbed $1,482 per vehicle from the first quarter of 2023. Moreover, inventory levels were flat compared to where they were three months ago.

The results at the model level were mixed. The Chevy Tahoe and Suburban models had their best first-half sales figures since 2007, while sales of the Camaro more than doubled. Cadillac's CT5 and Escalade models had gains of more than 25%, while Buick overall posted nearly 50% growth in unit sales. The GMC Sierra and Yukon performed well, offsetting declines elsewhere.

A long way to go on EVs

Unfortunately, it's taking a long time for General Motors to ramp up its operations with respect to electric vehicles. The company sold just 15,652 electric vehicles during the quarter, which works out to 3.4% of the 466,140 EVs that Tesla delivered during the same period.

Just about all of GM's EV sales came from the Chevy Bolt EV, where sales jumped 445% from year-ago levels to 13,959 units. Yet CEO Mary Barra has said that she expects GM to stop making the Bolt, instead favoring concepts like the Cadillac Lyriq electric SUV and the Hummer EV truck.

Investors want to believe in GM's long-term story, but the stock has seen a number of big rises followed by similarly steep declines. That suggests some ambivalence about how successful General Motors is likely to be in catching up to rivals like Tesla. Even with valuations based on earnings multiples at rock-bottom levels, it could be tough for General Motors to convince investors that it can make the transition to electric vehicles successfully.