Global auto-maker General Motors Company (GM) said on Thursday that it plans to suspend production at its Orion, Michigan assembly plant until mid-October. According to Reuters, the shutdown is in response to a new recall of the Chevrolet Bolt electric vehicle (EV) after battery issues caused 12 reported fires and 3 injuries. Shares closed at $51.52 on September 16.
In August, GM recalled more than 140,000 Bolts to replace the battery modules. The replacement is said to cost GM about $1.8 billion, which the company intends to recover from its battery supplier LG Chem Ltd. (See General Motors stock charts on TipRanks)
GM also went on to state that until the company is satisfied with the remedy, it will refrain from both manufacturing and selling its Bolt vehicles. At this point, the company does not have clarity on how much time it would take to replace the batteries and said that the company continues “to work with our supplier to update manufacturing processes.”
Additionally, GM also stated that it is cutting production at six other North American facilities that build the Chevrolet Traverse and the Buick Enclave, due to the ongoing global chip shortage. GM is also cutting production at plants in Mexico and Canada that manufacture SUVs like the Chevrolet Equinox, Blazer, and GMC Terrain.
As per Reuters, on Wednesday, the Commerce Department said that it would hold a White House meeting with automakers on September 23 to address the ongoing global semiconductor chip shortage, supply-chain-related issues stemming from the Delta variant, and the industry’s progress toward improving transparency.
Recently, Barclays analyst Brian Johnson maintained a Buy rating on the stock while lowering the price target to $68 (32% upside potential) from $71.
Johnson stated that the semiconductor chip shortage is causing further downside to GM’s North American sales. However, the analyst believes that GM can still live up to its guidance range and says that strong pricing offsets production pressures.
Overall, the stock commands a Strong Buy consensus rating based on 13 Buys and 1 Hold. The average General Motors price target of $73.36 implies 42.4% upside potential to current levels. Shares have gained 61.4% over the past year.