We are all familiar with the struggle legacy automakers like General Motors (GM) have faced in realizing their green aspirations. The world of electric cars and infrastructure for such vehicles is not quite where it needs to be. Despite this, recent advancements indicate progress, albeit not perceived by investors. On Monday, GM shares took a hit, dropping over 3% in afternoon trading.
Recent data regarding electric vehicle sales paints a positive picture for GM, with a noticeable uptick in sales extending through August. The figures are encouraging – GM managed to sell around 21,000 electric vehicles in July and August, almost matching its sales in the entire second quarter.
However, the real challenge lies in context. During the second quarter of 2024, GM sold close to 903,000 vehicles to dealers, dwarfing its electric vehicle sales. Nevertheless, GM’s performance in the EV market is on the rise, bringing it closer to Ford’s EV sales figures. While both automakers’ EV sales remain modest, progress is evident.
Navigating Through Roadblocks
Amidst these positive shifts, GM faces a setback as it prepares for layoffs at its Kansas-based Fairfax Assembly plant. A Worker Adjustment and Retraining Notification (WARN) notice disclosed that 1,695 workers will be affected. The layoffs are set to commence on November 18, 2024, with 250 temporary employees losing their jobs and 686 full-time workers facing temporary lay-offs.
The second round of layoffs is scheduled for January 12, 2025, impacting an additional 759 workers temporarily. The exact reasons for these job cuts are unclear, but initial reports pointed to a production pause for the Cadillac XT4. However, future plans include shifting the Fairfax plant’s focus to producing not just XT4s but also the Bolt EV, suggesting that these lay-offs may be temporary as GM retools the plant.
Evaluating GM’s Stock Performance
Analysts on Wall Street provide a Moderate Buy consensus rating for GM stock, with 10 Buy, four Hold, and two Sell ratings in the past three months. Following a 44.4% surge in share price over the last year, the average GM price target stands at $57.42 per share, indicating a potential upside of 21.27%.
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