General Motors (GM) is having a blast on Friday, with shares soaring 9% to nearly $39.
The move comes after the company raised its 2018 full-year outlook and provided 2019 guidance that came in well ahead of consensus expectations. Further, management announced that Cadillac will "be GM's lead electric vehicle brand" moving forward.
Of course, that squares up directly with Tesla (TSLA) , which is about flat on the day. Not only has Tesla become the world's largest electric vehicle producer, but it's become a leading seller among sedan vehicles with its Model 3. The vehicle ended the year inside the top 10 and was a top-five sedan seller in the fourth quarter.
It won't be GM's first foray into electric vehicles, but the tone came away as much more serious about its push into this future. Perhaps it comes on the back of Tesla successfully showing there's demand for these vehicles. Maybe it comes after Cadillac's foreign luxury competitors make large pushes into EVs as well, with Mercedes Benz (DDAIF) , Porsche, Audi, BMW (BMWYY) and Volkswagen (VLKAY) all announcing different strategies this year.
It also helps that battery costs are coming down. Part of GM's new EV architecture will help lead to a "family of profitable EVs," the company said. Further:
"The flexible platform will provide a broad array of body styles and will be offered in front-wheel, rear-wheel and all-wheel configurations. Its most critical components - including the battery cells - are being designed for maximum usability across all programs. The battery system will also be adjustable, based on vehicle and customer requirements."
Rather than relying on Chevrolet models to push the EV envelope, GM is now leaning on its luxury line, which will hopefully pull in customers. Unlike Tesla, though, the company is not hitting the runoff of the federal tax credit with a full head of steam. Instead, GM just hit the 200,000 EV sales mark, which starts the clock on a slow decline from the original $7,500 federal tax credit. Hitting that mark before making the Cadillac EV push could weigh on sales against its competitors who will have the EV federal tax credit, but it's no guarantee that will be the case. So far, Tesla is the only other company to hit the mark.
In any regard, General Motors isn't looking at the electrification movement over the course of the next few quarters. It's repositioning for a much larger commitment and a much larger EV market in the future.
"We will continue to strengthen our core business and invest in the technologies that will transform the future of mobility. Managing both well is critical to position General Motors for success for generations to come," CEO Mary Barra said in the press release.
That means slashing sedan exposure, bulking up on SUVs and trucks, and pouring funds into EVs and autonomous technologies. Investors are watching for any sort of updates from the Detroit Auto Show starting next week and General Motors is set to report earnings later this month.