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General Motors stock price gains after going all-in on electric vehicles

By: Invezz
GM

Shares of the U.S. automaker General Motors (NYSE: GM) soared nearly 4% yesterday after the company said it will pull out of the legal battle to ban California from setting its own fuel economy standards.  

Fundamental analysis: All-in on EV

The company sent a letter to environmental groups to inform them about the decision to drop support for the lawsuit. Instead, CEO Barra said the carmaker will support efforts of president-elect Joe Biden to increase the use of electric cars. 

“We believe the ambitious electrification goals of the President-elect, California, and General Motors are aligned, to address climate change by drastically reducing automobile emissions,” Barra wrote in a letter.

Other carmakers that backed Trump, such as Toyota, are considering their next steps. 

“Given the changing circumstances, we are assessing the situation, but remain committed to our goal of a consistent, unitary set of fuel economy standards applicable in all 50 states,” Toyota wrote in a statement.

Along these lines, GM committed to increase investments in EV technology. It is also said that it is now working to produce a new battery chemistry to reduce costs of producing EV cars.

This prompted analysts to raise their outlook on GM, with Morgan Stanley analyst Adam Jonas raising the price target to $53.00 per share from prior $44.00.

“No hybrids. No Europe. Allocating $27bn towards EV investment by 2025 with a plan to launch 30 EV models by 2025. GM expects cost parity of ICE & EV by mid decade with 1 million EVs by 2025 and EV costs down 60% by mid-decade. GM has a head start vs. other legacy OEMs in the race for EVs at scale and a clear strategy to get there,” the analyst said in a note sent to clients.

Technical analysis: New record highs almost printed

Yesterday’s high of $46.71 came just shy of the all-time high of $46.76 printed over 3 years ago. GM share price has been on a tear since August to gain about 85% in less than four months. 

GM stock daily chart (TradingView)

Buyers seem determined to push the price action towards fresh record highs. What may follow, in that case, is profit-taking that will create a pullback in the stock towards the low $40s.

Summary

General Motors said it will not support the Trump administration in the lawsuit against California and will insated increase its investments in EV production. 

The post General Motors stock price gains after going all-in on electric vehicles appeared first on Invezz.

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