General Motors Revs Up EV Game, To Invest $2B in U.S. Plant

Zacks Equity Research
·5-min read

General Motors GM recently announced the decision to invest $2 billion in its Spring Hill, TN assembly plant. This will facilitate the transition of the assembly plant to become the company’s third vehicle production facility for manufacturing electric vehicles (EV). The company’s two existing EV manufacturing plants are Factory Zero in Detroit and Hamtramck, MI, and Orion Assembly in Orion Township, MI.

The new luxury Cadillac LYRIQ will be the first EV to be manufactured at Spring Hill, along with the conventional combustion engine-powered Cadillac XT6 and XT5 luxury SUV crossovers, making the plant at Spring Hill not 100% electric, unlike the Factory Zero and Orion Assembly plants. The renovation work in Spring Hill will commence immediately.

The Detroit automaker also confirmed its plans of making additional investments of $153.25 million in five Michigan plants, including the Lansing Delta Township Assembly and Flint Assembly for production of future crossover and full-size pick-up, making the total investment in the six U.S. plants amounting to more than $2 billion. This will sum up to a total investment of more than $29 billion announced by the company in U.S manufacturing plants since 2009.

The details of the additional investments in five existing Michigan plants are as follows:

General Motors has decided to move production of the GMC Acadia from the Tennessee plant to the Lansing Delta Township Assembly in Michigan, resulting in an investment of more than $100 million.

The Michigan Flint Assembly will receive a $32-million investment for the production of heavy-duty Chevrolet Silverado and GMC Sierra pick-ups to cater to the growing demand in North America.

Nearly $17 million will be invested in the Romulus, MI propulsion plant to boost the automation and capacity of the 10-speed truck transmission produced there, which is used in a number of full-size pick-ups and SUVs manufactured by General Motors.

The Orion Assembly plant in Michigan will receive a financing of $3.5 million. Additionally, $750,000 will be directed to the plant in Brownstown Charter Township, MI. Both investments are related to the production of the Cruise AV test vehicle.

The investment decision is a latest for the auto biggie as it is shifting toward EVs to support its vision of a world with zero crashes, zero emissions and zero congestion through the creation of electric, self-driving, connected vehicles and shared mobility services that will transform the face of the auto industry.

GMC Hummer EV Unveiled

General Motors unveiled the first look of its 2022 GMC Hummer EV sport utility truck, online, yesterday night, following the announcement of management’s latest investment plans.

Per the auto giant, the big, bold and extravagant vehicle is the “world’s first supertruck”. It will deliver the performance of an exotic sports car, integrated with off-road capabilities and advanced technologies.

The Hummer EV pick-up will be rolled out next year at an initial price of $112,595, including destination charges, for an introductory version called the Edition 1. A $99,995 model will be accessible a year later, followed by $89,995 and $79,995 models to be rolled out in 2023 and 2024, respectively.

Revolutionizing the EV Space

Amid the heightening climate-change concerns, investors are intrigued by automakers that look for solutions to lower their global carbon emissions by proving green transportation. A shift toward electric future has made it necessary for industry players to reorient their business model and accelerate the EV game. Amid the transforming auto industry, companies like Tesla TSLA, Ford Motor Company F and NIO Inc. NIO are taking considerable strides to provide transportation with zero emissions.

General Motors is also committed to the company’s goal of providing completely carbon-free transportation in the upcoming years and is boosting its electrification efforts to reach the target. The company has always been at the forefront of the automotive revolution and is focused on its vision of an all-electric future. It had previously announced its plans to release at least 20 new electric vehicles globally by 2023, including the upcoming GMC Hummer EV, which was unveiled last night.

Since March 2019, General Motors has promised to invest more than $4.5 billion in three U.S. manufacturing sites, in order to make those facilities ready for EV production. Moreover, last year, the company announced that it would outlay $300 million in the Orion Assembly to produce a new Chevrolet electric vehicle, creating 400 vacancies at the facility. This new Chevrolet EV will be designed and engineered based on an advanced version of the breakthrough Bolt EV architecture.

In December 2019, General Motors formed a joint venture with LG Chem to mass produce battery cells for its electric vehicles, a portfolio that will include a new battery-electric truck coming in the fall of 2021. The companies are jointly investing more than $2.3 billion to establish a battery-cell manufacturing plant in Lordstown, OH, that will create more than 1,100 new jobs. The new battery-cell manufacturing plant will play a pivotal role in the automaker’s resolution to provide a green future.

General Motors currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of General Motors have declined 2.7% on a year-to-date basis, underperforming the industry’s 140.2% rally.

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