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.