General Motors’ (GM) battery supplier LG Corporation has resumed production at its plants located in Hazel Park and Holland, Michigan. The supplier is also to add capacity to produce more battery cells to meet the automaker’s needs. Shares of the automaker fell 3.82% to close at $49.37 on Monday.
LG ramping up production should allow General Motors to begin shipping “replacement battery modules” as early as mid-October. The battery supplier has already implemented a new manufacturing process and enhanced its quality assurance programs to address the issue of battery fires that have recently raised concerns. (See General Motors stock charts on TipRanks)
Meanwhile, GM is to prioritize Chevy Bolt EV and EUV customers whose batteries were faulty and susceptible to catching fire. The automaker has already established a notification process to inform affected customers about the availability of battery replacement modules.
The new batteries will come with an extended limited battery warranty of 8-year/100,000-mile. Additionally, GM intends to launch a new diagnostic software package that will increase the currently available battery charging parameters. The diagnostic software will also detect abnormalities in the battery by monitoring its performance.
Recently, Barclays analyst Brian Johnson reiterated a Buy rating on the stock and lowered the price target to $68 from $71, implying 37.7% upside potential to current levels.
According to Johnson, chip shortages in the auto industry continue to impact General Motors’ North America wholesales. Further, the analyst expects the company to post results inside its guidance range.
Consensus among analysts is a Strong Buy based on 13 Buys and 1 Hold. The average General Motors price target of $73.36 implies 48.6% upside potential to current levels.
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