General Motors (GM) and South Korea’s Samsung SDI cemented their deal to start a new electric vehicle (EV) battery production plant in Indiana for $3.5 billion. The only caveat is that the production plan has been delayed to 2027 from the previous due date of 2026. The two companies will jointly manufacture the much-in-demand EV battery cells, with an initial annual capacity of 27 gigawatt hours (GWh).
The Indiana plant will have the option to boost its annual capacity to 36 GWh. It is expected to account for roughly 15% to 20% of GM’s EV battery capacity.
GM Keeps Delaying EV Plans
The EV battery production plant, which was first announced in April 2023, aimed at an annual capacity of 30 GWh and was expected to cost $3 billion jointly. Legacy automaker General Motors continues to delay the production of EVs amid slower-than-expected demand due to unfavorable macroeconomic conditions.
Recently, GM cut its annual EV production outlook to 250,000 units from the 300,000 units guided earlier. GM has also pushed back its plan to launch a new Buick EV and the opening of an EV truck factory, while also withdrawing its goal to manufacture one million EVs in 2025.
Even still, GM looks unfazed by the delay, as CEO Mary Barra is optimistic that the company will see growth in the EV division as demand increases and EV charging infrastructure ramps up. GM plans to assemble at least 200,000 EVs this year. It already operates a battery business in Ohio and Tennessee in partnership with LG Energy Solutions, called Ultium Cells. Meanwhile, another GM-LG battery manufacturing plant is slated to begin production in the fourth quarter of this year.
Hedge Funds Offload GM Stock
Amid the current headwinds, hedge funds are offloading GM stock. According to TipRanks’ Hedge Fund Trading Activity tool, GM has a Very Negative Hedge Fund Confidence Signal, as hedge funds decreased their holdings of GM shares by 4.1 million in the last quarter.
What Is the Target Price for GM Stock?
Wall Street is cautiously optimistic about GM stock’s trajectory. On TipRanks, GM stock has a Moderate Buy consensus rating based on 12 Buys, two Holds, and two Sell ratings. Also, the average General Motors price target of $57.23 implies 16.2% upside potential from current levels. GM shares have gained 37.9% so far this year.
