Shares of General Motors (NYSE:GM) fell slightly in today’s trading after the automaker was fined nearly $146 million because 5.9 million of its older vehicles from 2012 to 2018 didn’t meet emissions and fuel economy standards.
The National Highway Traffic Safety Administration said these GM vehicles didn’t meet federal fuel economy rules, and the Environmental Protection Agency (EPA) found that GM’s trucks and SUVs emitted 10% more carbon dioxide than they initially reported. Interestingly, these vehicles can’t be fixed and will stay on the road.
In response, GM says it followed all the rules when certifying its vehicles for pollution and mileage and denies any wrongdoing. The EPA’s action affects about 4.6 million full-size trucks and SUVs and 1.3 million midsize SUVs, like the Chevy Tahoe, Cadillac Escalade, and Chevy Silverado. GM will also lose credits that were used to meet emissions standards.
The EPA called the violations unintentional, but some experts, like David Cooke from the Union of Concerned Scientists, doubt GM didn’t know about the excess pollution. Environmental groups emphasize the need for strong pollution rules, especially after the Supreme Court recently limited the EPA’s power. In fact, it rejected a 40-year-old legal doctrine called Chevron, which effectively reduces the power of the EPA and other executive branch agencies by shifting that power to the courts.
Is GM a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on GM stock based on 12 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 20% rally in its share price over the past year, the average GM price target of $56.60 per share implies 21.75% upside potential.
