GM may be engineering one of the best turnarounds in business history, Morgan Stanley's Jonas says

Published Thu, Jan 21 20218:59 AM ESTUpdated Thu, Jan 21 202111:27 AM EST

Morgan Stanley auto analyst Adam Jonas didn't mince words when talking about General Motors' push into electric vehicles and what it means for the legacy automaker. "What Mary Barra and the team are doing at GM — and look there's still room to go — but what they're doing may end up being one of the most profound strategic turnarounds, not just in the auto industry, but in business," Jonas said Thursday on CNBC's "Squawk Box." Shares of GM hit an all-time high on Wednesday as investors continue to reward the company's initiatives , which include 30 new electric vehicles under a $27 billion investment in electric and autonomous vehicles through 2025. The stock price rose Thursday morning to $56.30. Jonas has an overweight rating and $57 target on GM. GM shares are up 34% this year, outperforming not just the S & P 500 's 2.5% gain but also Tesla 's, up 21%. In the last year, however, GM has advanced 60% while Tesla has surged 677%. Over the last decade, GM shares have badly trailed the market, returning just 6.9% annually compared to the S & P 500's 14% yearly return. Jonas pointed to Barra's strategic decisions since she took the reins in 2014, including exiting Europe and purchasing the self-driving tech start-up Cruise, as putting the company on a better path. "The best is yet to come," he said. Despite shares' advance this year, Jonas said with so much attention focused on competitors like Tesla, the Street still isn't paying enough attention to GM. "We're going to see some things that I think are going to shock people and rerate this company, and it may not come from the auto industry investors. It's going to come from ESG and tech investors. So that's, we think, the story of 2021," he said. Electric vehicles represent just a fraction of global auto sales, but Jonas believes they will soon displace internal combustion engine cars. The move is going to be "traumatic," according to Jonas, who likened the decline to what's happened to the coal industry. He said GM's EV unit will prosper on its own because its operations are separate from the internal combustion engine unit. Given the various business channels, Jonas said investors should look at all of these parts when valuing the company. He noted that data will become an increasingly important element of GM's business as cars become autonomous. "The value is in the network, the data," he said, adding that investors shouldn't think about each car as unit times price, but rather mobile real estate whose data can be monetized. On Tuesday GM announced a long-term strategic relationship between Microsoft and Cruise , which is the automaker's majority-owned autonomous car unit, to accelerate the commercialization of self-driving vehicles. - CNBC's Michael Wayland and Michael Bloom contributed reporting.

An undated handout photo shows the new Cadillac Lyriq, one of the electric vehicles that General Motors Co said on October 20, 2020, that its Spring Hill, Tennessee, factory will begin to produce.

General Motors Co. | Reuters

Morgan Stanley auto analyst Adam Jonas didn't mince words when talking about General Motors' push into electric vehicles and what it means for the legacy automaker.