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Cadillac could be the next Tesla if General Motors markets it right (GM, TSLA)
Matthew DeBord/BI
General Motors could brand its Cadillac as the next Tesla given the right marketing ploy, Adam Jonas of Morgan Stanley said.
The automotive company is undervalued because investors have not properly gauged the potential of Cadillac.
The luxury vehicle's biggest market is China, representing an upside for General Motors' stock.
You can view GM's stock price here.
General Motors could market its Cadillac brand as the next sustainable and high-performance electric vehicle just like Tesla.
With aggressive marketing, the automotive company has the "potential for fundamental repositioning of Cadillac as a 'captive Tesla,'"Adam Jonas, an equity analyst at Morgan Stanley, said. The company needs to improve consumer awareness of its brand and technologies, such as a future propulsion system and a subscription-based business model, he added.
Investors have been undervaluing General Motors because Cadillac is larger and more profitable than investors believe. "Discussions with investors suggest a potential "blind spot" on the strategy and valuation of General Motors," Jonas wrote in a note.
Cadillac reported a sales increase of 15.5% year-to-date, as of December 2016. GM does not break down the profit for its specific brands though.Jonas estimates that Cadillac could be worth $13 billion given the increasing sales, which have doubled since 2010.
Cadillac's largest market is China, which accounts for over a half of GM's global sales volume.
General Motor's stock is up 5.93% over this year.
To read more about how Tesla's Autopilot and Cadillac's Super Cruise fare against each other, click here.
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