General Motors' (GM) Resilient EV Supply Chain to Drive Success

General Motors GM and POSCO Future M have announced a significant increase in their investment to expand the production capacity at their chemical battery materials facility in Canada. The collaboration aims to support GM's ambitious goal of manufacturing 1 million electric vehicles (EVs) in North America by 2025. The companies' combined investment in the plant is expected to exceed $1 billion, with new facilities scheduled to start operating in 2025. This expansion will enable local on-site processing of critical minerals used in EV batteries, enhancing the sustainability and security of GM's EV supply chain.

The increased investment in Ultium cathode active material (CAM) joint venture signifies a crucial step toward building a more secure and sustainable supply chain to meet GM's growing EV production needs. The joint venture will expand the capacity of the Ultium CAM plant and establish a precursor facility for the on-site processing of critical minerals. These investments will foster higher levels of vertical integration, ensuring greater control and efficiency throughout the battery supply chain, from cell production to raw material recovery.

Collaboration Supports GM's EV Push & Job Creation

GM's partnerships, investments, and strategic supply agreements in the EV sector have been instrumental in creating numerous job opportunities across North America, including Canada, the United States, and free trade agreement countries.

The collaboration between GM and POSCO Future M will have several positive implications for the automotive industry and the transition to sustainable transportation. The increased production capacity will support the manufacturing of approximately 360,000 Chevrolet, Cadillac, GMC, Buick, and BrightDrop vehicles annually in the 2025-2030 timeframe in North America. By expanding the availability of EVs, major automakers are taking significant steps toward achieving cost parity with internal combustion engines and accelerating the adoption of clean and green transportation.

The collaboration will not only bolster GM's EV production capabilities but also generate employment opportunities. The investments made by GM and POSCO Future M will contribute to job creation across the North American region, stimulating economic growth and supporting local communities. The establishment of additional facilities for the on-site processing of critical minerals will also reduce reliance on imports, further enhancing the resilience of the EV supply chain.

By working together, GM and POSCO Future M are taking bold steps toward a cleaner and more sustainable future in the automotive industry.

GM’s Bid to Revamp EV Chain

As EVs take center stage in the automotive industry, General Motors has embarked on a strategic journey to fortify its EV supply chain. By securing raw materials, boosting cell manufacturing, and enhancing EV components production, GM aims to insulate itself against potential supply disruptions and accelerate its transition to electric mobility.

Below we highlight several partnerships and alliances that General Motors has entered into over the past couple of years, illustrating the company's commitment and forward-thinking strategy in the rapidly evolving EV landscape.

GM embarked on its mission in July 2021, with a significant investment in Controlled Thermal Resources, targeting California-sourced lithium extraction. To ensure a steady supply of U.S.-sourced rare earth materials, the automaker formed an alliance with MP Materials in December 2021. The same month, GM announced a production initiative with POSCO Future M in Canada to produce CAM.

Continuing this trend, GM secured a sustainable cobalt supply in April 2022 with Glencore, followed by a six-year agreement for battery-grade lithium with Livent in July 2022. In the same month, it inked a major supply agreement with LG Chem, promising GM over 950,000 tons of CAM, enough for approximately 5 million EVs. Additionally, GM established contracts with Queensland Pacific Metals and Vale for a long-term supply of nickel and cobalt, further reinforcing its supply chain.

January 2023 marked a significant milestone with a $650 million equity investment in Lithium Americas, leading to the development of the Thacker Pass lithium mine in Nevada.

Beyond raw materials, GM has shown great commitment to cell manufacturing and R&D. The establishment of Ultium Cells LLC, a joint venture with LGES, and an alliance with Samsung SDI for a new U.S. battery cell plant demonstrates GM's vision. The Wallace Battery Cell Innovation Center in Warren, MI, further propels the automaker’s endeavor for innovative, longer-range, and affordable EV batteries.

GM's investment extends to EV components, with significant investments announced in Toledo, OH, for the production of drive units. A binding agreement with Vacuumschmelze ensures North America magnet production, and a new initiative to build EV motors at St. Catharines, Ontario, was declared in February 2023.

In conclusion, GM's strategic efforts reflect a firm commitment to establishing a secure and resilient EV supply chain, thus demonstrating an ambitious vision to lead the global shift toward electric mobility.

Zacks Rank & Other Key Picks

General Motors currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked players in the auto space include Ford F, Stellantis STLA and BMW AG BAMXF.

Ford, General Motors’ crosstown rival, is one of the leading automakers in the world. Ford's robust BEV lineup — with Mustang Mach-E, E-Transit and F-150 Lightning — is set to drive top-line growth. The company currently sports a Zacks Rank #1 and has a Value Score of A.

The Zacks Consensus Estimate for F’s 2023 sales implies year-over-year growth of 7.5%. The consensus mark for 2023 and 2024 EPS has moved north by 4 cents and 3 cents, respectively, over the past seven days.

Stellantis, an Italian-American carmaker, is one of the notable names in the auto space. Stellantis’ Dare Forward 2030 strategy bodes well. The core objective of Dare Forward 2030 is to achieve 100% of total passenger car sales in Europe and 50% of light-duty truck and passenger car sales in the United States as battery electric vehicles by the end of the decade.

The Zacks Consensus Estimate for STLA’s 2023 sales implies year-over-year growth of 13.4%. The consensus mark for 2023 and 2024 EPS has moved north by 27 cents and 49 cents, respectively, over the past 60 days. The stock sports a Zacks Rank #1 and has a Value Score of A.

BMW is a Germany-based auto titan that designs, manufactures, and distributes luxury vehicles and motorcycles.BMW AG is taking great strides in electrification and expects EVs to account for 50% of its global sales by 2030. For 2023, the company plans to increase BEV share to 15%.

The Zacks Consensus Estimate for BAMXF’s 2023 sales implies year-over-year growth of 9%. The consensus mark for 2023 EPS has moved north by 6 cents and 81 cents, respectively, over the past 30 days. The stock sports a Zacks Rank #1 and a Value Score of A.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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