General Motors Company (NYSE: GM) made several positive announcements regarding its electric vehicles (EVs) initiatives last week, and the stock bounced off the mid-US$48 range to close the week nearly 10% higher. GM plans to sell only electric vehicles beginning in 2035. In particular, finding a fix for the battery problem in the Chevrolet Bolt EV removes an issue which has been dogging the company and pressuring GM stock for several months.
On September 20, GM identified a combination hardware and software solution to the Bolt battery defect that causes some Bolts to catch fire without impact. Bolt owners no longer need to park their vehicles 50 feet away from other cars and structures if they follow the company’s new charging instructions.
Some of the batteries manufactured by GM’s long-term battery supplier LG had two manufacturing defects: a torn anode tab that allows the anode (or negative electrode) of a cell to be wired into a module and then into a full battery pack; and 2) a folded separator, the thin sheet of material that separates the anode and cathode. If both defects existed in the same cell, that significantly increased the possibility of a fire within affected cells.
LG has restarted Bolt EV battery production with updated manufacturing processes at its plants in Holland, Michigan. GM will begin replacing Bolt battery modules in October; appointments will be prioritized for customers whose vehicles were manufactured during time periods when defects appear to be clustered. All 141,000 Bolt EV models have been recalled at an expected cost of US$1.8 billion. GM is negotiating with LG to have LG bear some of these costs.
GM will also distribute a new diagnostic software package that may detect abnormalities that signal a damaged battery. The software will hopefully alert customers to the existence of any problems.
Cadillac Lyriq SUV
GM started accepting reservations for the 2023 Cadillac Lyriq electric SUV over the weekend of September 18-19. GM said the reservation book was filled in just ten minutes — despite the Bolt EV battery issues. However, GM did not say how many non-binding US$100 reservations it accepted, nor did it say how many Lyriqs it plans to build in 2022.
GM plans to invest US$2 billion in the Lyriq SUV. It will be built at the factory in Tennessee which produced the Saturn models. The Lyriq reportedly has a driving range of around 300 miles; its starting price could be around US$60,000.
The batteries to be used in the Lyriq SUV and the GMC Hummer EV (a sport utility truck with a starting price in excess of US$100,000) will utilize Ultium batteries, not the batteries deployed in the Bolt EV. A joint venture of GM and LG will manufacture the Ultium cells which have different chemistries and manufacturing processes than the Bolt EV batteries.
With news of the Bolt EV battery fix and a series of announcements expected over the next few months regarding its new fleet of EVs, GM stock could be poised to continue to rally. The stock peaked in the low-to-mid US$60 range in June.
General Motors Company last traded at US$52.23 on the NYSE.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.