According to a report published by Reuters, U.S. automaker General Motors (GM) has said that South Korean multinational electronics company LG Electronics Inc. will reimburse it for the expenses and costs related to the Bolt electronic vehicle (EV) recall.
LG Electronics, which is GM’s battery supplier, will pay the automotive giant an estimated $1.9 billion as reimbursement. Shares of GM rose 1.5% on Tuesday to close at $58.96. (See Top Smart Score Stocks on TipRanks)
The company has recalled more than 140,000 Bolt EVs due to fire risks. GM has also requested Bolt owners to park their vehicles at least 50 feet away from other vehicles.
After conducting a joint analysis with LG, GM found that two rare defects — a folded separator and a torn anode — caused the fire. Further, the automaker is collaborating with LG to boost the production of new battery modules, with repair and replacement work likely to commence in October.
Last week, Credit Suisse analyst Dan Levy reaffirmed a Buy rating on General Motors with a price target of $75 (27.2% upside potential).
In a research note to investors, the analyst said, “GM is trying to shatter the perception that they are a no-growth Auto 1.0 company facing powertrain risk, and instead show us the potential for growth, EV leadership, and significant revenue outside core vehicle sales.”
Overall, the stock has a Strong Buy consensus rating based on 13 Buys and 1 Hold. The average General Motors price target of $71.93 implies 22% upside potential. Shares have gained 85% over the past year.
According to TipRanks’ Smart Score rating system, General Motors scores a “Perfect 10,” suggesting that the stock is likely to outperform market averages.