An unexpected issue emerged at legacy automaker General Motors (GM), as it looked to pare back production at one of its plants. The Spring Hill, Tennessee factory is pulling back on electric vehicle (EV) production as it faces a changing market. Interestingly, shareholders did not seem particularly fazed by this development, as they sent GM shares up fractionally in Thursday morning’s trading.
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When December comes, the Spring Hill plant will stop producing two models of Cadillac electric SUVs, a Reuters report noted. The two SUVs impacted by the change are the Lyriq and the Vistiq. The Lyriq is a midsize SUV, while the Vistiq is a larger variant. Both of them are electric. GM also revealed plans to push back starting a second shift at a Kansas City-area plant, which was tasked with the Chevy Bolt electric vehicle later this year.
The reasons are essentially the same; GM is paring back production on electric vehicles. A statement from the company noted, “General Motors is making strategic production adjustments in alignment with expected slower EV industry growth and customer demand by leveraging our flexible ICE (internal combustion engine) and EV manufacturing footprint.” With the government pulling electric vehicle sales credit, support for the entire product line is dwindling.
End of an Era
The production slowdowns might seem a bit contradictory, until you realize they are more a matter of future production than they are current production. In fact, General Motors recently posted its biggest month of sales for electric vehicles yet in the company’s history, noted a report direct from GM.
Car buyers rushed in to take advantage of the last few days of electric vehicle tax credits, and sent sales on an upward tear, the report noted. GM sold more than 21,000 electric vehicles in all of August across its various brand names, which proved to be the best month GM had ever seen for electric vehicle sales. It would probably, also, be the best month it will ever see, for at least some time, now that the credit program is gone.
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, four Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 19.94% rally in its share price over the past year, the average GM price target of $59 per share implies 1.72% upside potential.