Some stocks are well-suited for short-term trading due to their fast-paced nature. However, others, like General Motors (NYSE:GM), are designed to be bought and held for extended periods. General Motors, recognized as a consistent profit-generator and American icon, provides a dependable income source for long-term investors. This is in stark contrast to the volatile and risky nature of stocks like Tesla (NASDAQ:TSLA) and startups like Lucid Group (NASDAQ:LCID) and Rivian Automotive (NASDAQ:RIVN).
For those investors aiming to minimize their portfolio’s exposure to risky, untested concepts such as self-driving taxis or robotaxis, General Motors proves a superior choice over Tesla. Tesla’s CEO, Elon Musk, has been earmarking substantial resources for the robotaxi program. He scrapped a proposed plan to construct $25,000 electric vehicles (EVs) to fund the expansion of this venture. Contrarily, General Motors plans to reduce its investment in robotaxis, anticipating a cutback of $1 billion in spending on the Cruise division by 2024.
Though, this does not infer that General Motors isn’t taking risks or generating innovative product concepts. An instance of this is GM Energy, a subset of General Motors. GM Energy is introducing a product that can relay power between an EV and a home. This “vehicle-to-home (V2H) bidirectional charging technology” is intended to enable power transfer from a suitable GM EV to a suitably enabled home. In the face of power outages, V2H technology would become a vital tool. General Motors plans to be at the forefront of developing and marketing this concept.
Despite being a cautious company that allocates its capital wisely, General Motors is also a daring innovator. If investors want a piece of V2H technology but hold reservations about robotaxis, investing in General Motors as opposed to trading Tesla stock could be the more logical course. Furthermore, General Motors recently increased their dividend, something that neither Tesla nor many automotive startups do.
Investors looking for long-term gains should consider broadening their investment timeframe to span years or even decades and invest in GM stock shares. For maximum long-term gains, consider reinvesting the dividends received.
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