General Motors' decision to sell its stake in the Ultium Cells battery cell plant in Michigan reflects a strategic approach to capital efficiency for the automaker and suggests a possible shift in electric vehicle demand. The company announced its plans on Monday, revealing intentions to sell its nearly completed Lansing facility stake to its joint venture partner LG Energy Solution.
This transaction is expected to conclude in the first quarter of 2025. With projections estimating the total investment in the plant to be around $2.6 billion, GM anticipates recouping close to $1 billion from the sale. In pre-market trading on Tuesday, shares of GM experienced a decline of 2.6%. UBS analysts Joseph Spak and Tim Bush commented, "This is another sign of capital efficiency for GM, and a signal that US EV demand may slow," highlighting the potential significance of this sale.
UBS maintains a buy rating on GM's stock, setting a price target of $62. While GM's ownership in Ultium Cells LLC will remain unchanged, the sale does not affect its other operational joint venture facilities located in Ohio and Tennessee. GM affirmed its commitment to utilizing the two existing Ultium Cells plants to address the increasing demand for electric vehicles. GM's Chief Financial Officer, Paul Jacobson, stated, "Our EV profitability is rapidly improving thanks in part to our strategic decision to build battery cells in the US with LG Energy Solution.
We believe we have the right cell and manufacturing capabilities in place to grow with the EV market in a capital-efficient manner." The automaker currently has approximately 90 gigawatt hours of capacity shared between its Ohio and Tennessee locations, which UBS estimates can support at least 900,000 vehicles.
The analysts noted, "So in our view, there was already little need to have much ownership over a third facility." In a report from October, GM disclosed it had delivered over 32,000 all-electric vehicles in the US during the third quarter, marking a sequential increase of 46% and a remarkable 60% rise compared to the previous year..