Where will General Motors stock be in 10 years?

With shares only returning 72% over the past 10 years (including reinvested DIVIDENDS), General Motors (GM 0.07%) dramatically underperformed S&P 500which has returned almost 250% in the same time frame. But while the iconic American automaker isn’t exactly inspiring right now, the government-backed transition to electric vehicles could become a transformational opportunity.

Let’s dig deeper to see what the next 10 years might have in store for company.

A New Age of Evil or a New Golden Age?

There are many theories about the cause of GM’s decline in the 1970s and 1980s (a period called the “era of malaise”). But perhaps too much blame is placed on American automakers themselves, rather than on government policy that pulled the rug out from under the industry without giving the Big Three much of a chance to prepare.

At the time, Washington introduced a series of strict environmental regulations, in contrast to the engine platforms these automakers had spent decades developing. Results from GM and others were rushedlow quality cars that destroyed their carefully constructed brand images and may still haunt them today.

The transition to electric vehicles will be another change for the industry. But this time, GM is ready.

Electric vehicles are here to stay

Some fear the EV industry stagnates due to relatively poor performance from the market leader adzewhich saw global second quarter deliveries rise by just 3% to 462,890 vehicles. But while Tesla may be peaking, GM is in a completely different gear, with third-quarter electric vehicle shipments up 60% year after year at 32,095 as it leverages its dealer network and brand recognition to gain market share.

GM’s success could they have something to do its large range of EV options. According to vice president Rory Harvey, GM has “an all-electric vehicle for almost everyone, no matter what they like to drive.” And management is using the disruption caused by changing technology to resurrect fading brands and reclaim lost market segments.

The most impressive example might be Cadillac — a brand that once dominated luxury automobile production in the early 20th century before losing ground to imported European rivals during the lean period.

Image source: Getty Images.

GM is returning the brand to its luxury roots with new electric vehicles like the Celestiq 2025. According to Car and driverthis ultra luxury electric sedan is built to order manually. And with prices starting north of $300,000, it will compete with like to Rolls Royce and Bentley. After better-than-expected demand, Celestiq has already sold out through 2025.

Cadillac is also making a big splash into the more affordable end of the luxury market with the Lyriq — a $59,900 premium SUV that saw sales explode 139 percent to 7,224 units in the third quarter.

What does this mean for investors?

Over the next 10 years, GM looks poised to use the EV transition to finally reinvent itself, decades after its woes suddenly stole its mojo. The Cadillac brand could be the most interesting beneficiary of this trend, as higher-priced cars tend to have better margins.

Brand cachet will be key as industry leaders such as Tesla steadily lower prices and low-cost Chinese rivals could make inroads into global markets despite protection tariffs in the USA and the European Union.

With all that being toldit’s unclear whether these positive trends will be enough to move the needle for MG stock. While electric vehicles will likely allow some of GM’s brands to gain market share, they could cannibalize others, which is not a very exciting one perspective for investors. However, with a striker price-earnings ratio ratio of only 4.6stock remains very cheap. And it could have a place in a value-oriented portfolio.