Some Analysts Support an Electric Vehicle Spinoff for GM

GM’s stock got a nice little bump this week after analysts tossed around the idea that the American carmaker could spin off its fledgling electric vehicle division. But what exactly is a spinoff and why might GM be interested?

A spinoff is when a company breaks off a portion of its operations and turns it into a separate entity with its own management and ownership structure.

• Spinoffs can be helpful because 1) it lets each business focus on what they're best at and 2) in theory, it gives the spun-off asset more room to grow.
• Morning Brew, for example, could spin off our swag business if it distracted us from writing newsletters and we thought it could eventually go toe-to-toe with Lululemon.

Morgan Stanley estimates GM’s electric vehicle business, which hopes to have 20 fully electric models by 2023, to be worth $20 billion as a standalone unit.

Call it the Tesla effect: When an all-electric car company is worth 8x as much as you, you take a hint. By spinning off its EV unit, GM might better compete with its suddenly much larger sibling.