General Motors and LG Energy have agreed to invest more than $2.3 billion in constructing a second battery plant in Tennessee. The plant is to be built by Ultium Cells LLC, a joint venture between the two companies.
Once complete, the plant will produce battery cells to be used in General Motors (GM) Spring Hill assembly plant. The proposed battery cell manufacturing plant should be up and running by late 2023 and will likely result in the creation of 1,300 new jobs.
The addition of a second Ultium Cell’s battery cell manufacturing plant will mark an important milestone in GM’s push for an electric future. The strategic partnership should also affirm Tennessee’s stature as a key hub for electric vehicles and battery production.
Commenting on the proposed battery facility, GM’s Chairman and CEO Mary Barra stated, “The support of the state of Tennessee was an important factor in making this investment in Spring Hill possible and this type of support will be critical moving forward as we continue to take steps to transition our manufacturing footprint to support EV production.”
The proposed facility will leverage advanced cell manufacturing processes and adapt to technological advances in battery and electric vehicle production.
General Motors shares are up about 41% year to date after a 13.58% pop in 2020. (See General Motors stock analysis on TipRanks).
Buoyed by the move to construct the new battery cell plant, Morgan Stanley’s analyst Adam Jonas reiterated a Buy rating on the stock. According to the analyst, the Ultium Cells LLC joint venture will be a game-changer for GM and he expects it to result in value creation for shareholders.
Jonas has an $80 price target on GM, implying 36.2% upside potential to current levels.
According to consensus estimates on Wall Street, General Motors stock is a Strong Buy based on 12 Buys and 1 Hold rating. An average analyst price target of $68.15 implies 16.08% upside potential to current levels.
General Motors scores a strong 8 out of 10 on the TipRanks’ Smart Score ranking system, implying that it is well-positioned to outperform the overall market averages.