General Motors (NYSE:GM) announced yesterday that it is postponing the opening of an electric vehicle (EV) truck manufacturing plant in Michigan. The legacy automaker cited the necessity to “better manage capital investment while aligning with evolving EV demand” as the reason for the delay. GM also revealed its plans to incorporate “engineering improvements” into its models to enhance the profitability of the trucks.
It is important to note that the Orion Assembly plant is undergoing a $4 billion revamp to become a fully equipped all-electric pickup truck manufacturing hub. The plant will now start making electric Chevrolet Silverado and GMC Sierra trucks by the end of 2025 instead of next year.
During the transformation of the factory, the roughly 1,000 hourly workers will have the option to shift to other Michigan plants. Meanwhile, the new electric versions of the Silverado and Sierra will be assembled at GM’s Factory Zero, in Detroit. The factory builds the electric GMC Hummer pickup trucks and SUVs, and the Cruise Origin shuttle.
Automakers’ EV Ambitions are Fading
A spokesperson for GM confirmed that the decision to delay the plant is not related to the ongoing strike by the United Auto Workers (UAW) union. He also said that GM’s EV production targets remain intact. The objectives include producing 400,000 EVs in North America through 2024 and going all-electric by 2035.
GM’s decision to delay the plant is the latest sign of the diminishing attractiveness of the EV market. The cost to manufacture and buy EVs is an expensive affair, and the current macro environment is not favoring the market. Recently, competitor Ford Motor Co. (NYSE:F) also decided to halt one assembly line shift for its F-150 pickup trucks at the Dearborn, Michigan, plant, affecting 700 workers. The pressure on EV manufacturers is building as demand slows and inventory piles up. Hence, the automakers are delaying the production of EVs.
Is GM a Good Stock to Buy Today?
The American auto industry is facing a slew of challenges, including high-interest rates, labor negotiations that could drive up their expenses, slowing EV demand, and company-specific difficulties. Yesterday, a Reuters report said that GM’s self-driving unit, Cruise, is facing a probe in the U.S. after incidents risking pedestrian safety. Amid these, Wall Street remains cautiously optimistic about General Motors stock.
On TipRanks, GM stock has a Moderate Buy consensus rating. This is based on eight Buys, five Holds, and two Sell ratings. The average General Motors price forecast of $48.53 implies 60% upside potential from current levels. Year-to-date, GM stock is down 9.6%.
