General Motors GM and its technology startup, BrightDrop, opened Canada's first full-scale EV manufacturing plant. The financial help from the governments of Canada and Ontario has enabled GM to completely retool the CAMI Assembly plant in record time to become the new global manufacturing home of BrightDrop’s fully electric delivery vans. GM began transforming CAMI for EV production on May 1, 2022. BrightDrop also announced the initiation of commercial operations in Canada, with DHL as its first customer in the country.
The company began production of the BrightDrop Zevo 600 electric delivery vans at its CAMI Assembly plant in Ontario on Dec 5, signaling a new chapter in Canada’s EV production and a significant step in the fight against climate change.
The business was launched in 2021 with nearly $800 million investment from its parent company GM to convert the CAMI Assembly plant to BrightDrop’s high-volume EV production facility. To cater to strong customer demand, CAMI expects to produce 50,000 Zevo vans annually by 2025. Scaled production is scheduled to begin with Zevo 600 models in January 2023 and Zevo 400 models in late 2023.
DHL Express Canada intends to add its first BrightDrop Zevo electric delivery vans to its fleet early next year. Bringing BrightDrop’s commercial solutions to its operations is part of DHL’s €7 billion aim to reach net-zero emissions by 2050.
Following one of the best launches, BrightDrop completed the delivery of the first Zevo 600s to FedEx last year.
The BrightDrop Zevo is a great example of GM's Ultium EV architecture, and it is laudable that within less than two years, it has gone from concept to commercialization.
Riding on the company’s huge demand in the United States, with more than 30 customers, BrightDrop has made its move into Canada’s market to promote sustainable transportation.
With full-scale manufacturing of the BrightDrop Zevo electric delivery vans, BrightDrop’s customers will replace their gasoline and diesel vans leading to a significant reduction in its fleet of greenhouse-gas tailpipe emissions. At the same time, BrightDrop customer productivity will increase with the use of its suite of products like Trace eCarts, which were developed and tested majorly by the GM Canadian Technical Centre in Oshawa.
In another development, General Motors and LG Energy Solution will invest an additional $275 million in their joint venture battery plant in Tennessee to ramp up production by more than 40%.
The new investment in the joint venture known as Ultium Cells LLC is an addition to the $2.3 billion announced in April 2021 to build the sprawling facility. Production at the plant is scheduled to commence in late 2023.
The Inflation Reduction Act in the United States has spurred automakers worldwide to move operations to the United States. The act, which was signed into law in August, intends to enhance EV capabilities by providing manufacturers with $40 billion in tax credits and stating that EVs eligible for such credits should be made with more American-made parts. Undoubtedly, this law has led automakers to scramble for U.S. production of electric vehicles and batteries to qualify for the incentives.
It is, therefore, natural that domestic production of battery cells in North America is gradually becoming vital for automakers to intensify their EV footprints to qualify for federal incentives.
The Ultium Cells Spring Hill site, part of Ultium Cells, LLC, is expected to collaborate with other joint venture battery cell manufacturing sites in Ohio and Michigan. A plant in Michigan is also underway and is scheduled to begin production in late 2024.
The expansion of the battery cell output at Ultium Cells Spring Hill will ensure that GM offers one of the most robust EV portfolios and solidify its path toward U.S. EV leadership.
Shares of GM have lost 37% over a year compared with the industry’s 50.1% decline.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
GM currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked players in the auto space – CarParts.com PRTS, sporting a Zacks Rank #1 (Strong Buy), and Allison Transmission Holdings ALSN and Genuine Parts Company GPC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
CarParts has an expected earnings growth rate of 85% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 72.7% upward over the past 30 days.
Allison has an expected earnings growth rate of 26.1% for the current year. The Zacks Consensus Estimate for ALSN’s current-year earnings has remained constant in the past 30 days.
Genuine Parts has an expected earnings growth rate of 18.1% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report