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General Motors Co GM

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Bolt Battery Fire Recalls Are Disappointing but Needed to Ensure Safety for GM's All-Electric Future

Analyst Note

| David Whiston, CFA, CPA, CFE |

After the market closed on Aug. 20, GM announced another recall to replace batteries for fire risk on the Chevrolet Bolt car and Bolt EUV crossover. This recall is for 2020-22 model years as well as 2019 Bolts not included in previous recalls. In second-quarter 2021, GM recorded an $812 million charge for a Bolt recall for fire risk in 2017-19 model years, and GM estimates an additional $1 billion charge for the Aug. 20 recall. We expect the $1 billion will not be a third quarter special item, so we are lowering our 2021 adjusted diluted EPS to $5.80 from $6.32. The extra $1 billion is not large enough to merit changing our fair value estimate. GM’s 2021 total company adjusted EBIT guidance when factoring in the Aug. 20 recall is now $10.5 billion to $12.5 billion, and we model $10.5 billion.

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Company Profile

Business Description

General Motors Co. emerged from the bankruptcy of General Motors Corp. (old GM) in July 2009. GM has eight brands and operates under four segments: GM North America, GM International, Cruise, and GM Financial. The United States now has four brands instead of eight under old GM. The company remains the market leader in the U.S. with 17.3% share in 2020. GM Financial became the company's captive finance arm in October 2010 via the purchase of AmeriCredit.

Contact
300 Renaissance Center
Detroit, MI, 48265-3000
T +1 313 667-1500
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 155,000

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