Cadillac could be the next Tesla if General Motors markets it right

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 trading at $44.29 a share and 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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