General Motors Co. GM, a major vehicle and truck manufacturer, announced on Tuesday that it plans to invest over $2 billion to bolster its electric vehicle plants in the U.S. and challenge Tesla Inc.'s TSLA electric pickup Cybertruck.
The Detroit-based company said in a press release that it plans to convert its Spring Hill, Tennessee assembly plant into a third electric vehicle plant, joining the Orion Assembly plant in Orion Township, Michigan and the all-electric Factory ZERO plant in Detroit, which was announced last Friday.
Company invests further in EV, takes on Tesla
With the investment, GM seeks to upgrade and expand Spring Hill's assembly plant to build EVs, including the Cadillac LYRIQ, initiating its challenge against EV giant Tesla. Chairman and CEO Mary Barra said that the investment underscores the success of GM's vehicles and the company's vision of an all-electric future.
Last Friday, GM announced its Factory ZERO plant at Detroit, with the name reflecting the auto manufacturer's aim to achieve zero crashes, zero emissions and zero congestion in the future. The company plans to build its Hummer EV pickup and other key EV vehicles at Factory ZERO.
CNBC added that GM President Mark Reuss decided to resurrect the company's Hummer truck based on his discussions with Barra and other executives about "reimagining" the truck for a new generation of buyers. The company plans to unveil its GMC Hummer EV during the 2020 World Series, which begins Tuesday night. Production is expected to begin in late 2021.
Stock rises on EV announcement
Shares of GM soared to an intraday high of $35.71, up approximately 7% from the previous close of $33.55. The stock is modestly overvalued with a price-to-GF Value ratio of 1.24.
GuruFocus ranks GM's financial strength 3 out of 10 on several warning signs, which include a weak Altman Z-score of 0.87 and debt ratios that underperform over 77% of global competitors.
Gurus with large holdings in GM include Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. BRK.ABRK.B and Bill Nygren (Trades, Portfolio)'s Oakmark Fund.
Disclosure: No positions.
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