GM Pauses BrightDrop Van Production Amid Cooling Demand

General Motors (GM) is temporarily halting production of its BrightDrop electric delivery vans due to decreasing demand. This pause affects the CAMI Assembly plant in Ontario, leading to the temporary layoff of 1,200 workers. The suspension begins today and is projected to last until October 2025. GM states that this decision is not linked to recent auto tariffs but is intended to rebalance inventory and match production with slower-than-expected demand.

During this downtime, GM plans to retool the plant for the 2026 model-year BrightDrop vans. Upon resuming production, it will operate with a limited single shift, which will result in 500 permanent job cuts. However, GM remains committed to the BrightDrop initiative and the CAMI facility moving forward.

This pause highlights ongoing difficulties in the commercial electric vehicle (EV) sector, where adoption has not progressed as quickly as anticipated. As GM executes its strategy, investors may need to reconsider their position in GM stock.

Year-to-date, GM stock has decreased by 18%, lagging behind Ford, which saw only a 6% decline. This decline raises questions among investors about whether GM’s stock dip presents a buying opportunity or if substantial challenges lie ahead. Let’s dive deeper.

YTD Price Performance

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GM’s Position in the U.S. Market

General Motors remains the leading automaker in the United States. In 2024, its full-year market share increased by 30 basis points to 16.5%. During the first quarter of 2025, GM sold 693,363 vehicles, reflecting a 17% year-over-year increase. The company experienced double-digit growth across its major brands, including Chevrolet, Buick, GMC, and Cadillac.

Notably, other automakers also reported strong deliveries during the initial months of 2025. This surge in sales was likely spurred by customers eager to purchase new vehicles prior to anticipated price hikes stemming from tariffs.

Toyota, the second-highest seller in the U.S., sold 570,269 vehicles in Q1 2025, with electrified vehicles making up 50.6% of total sales. Sales for Toyota’s division totaled 487,226 units, while Lexus reached a record 83,043 deliveries.

Contrastingly, Ford recorded a 1.3% decline in sales volume, totaling 501,291 units, primarily due to reduced rental fleet sales as well as the discontinuation of models like the Ford Edge and Transit Connect. Nonetheless, Ford retains its position as the #3 seller in the U.S.

Advancements in GM’s EV Portfolio

General Motors continues to make notable progress in electrification. After producing 189,000 EVs last year, the company plans to ramp up production to 300,000 units in 2025. In Q1 2025, GM’s EV sales saw a remarkable 94% increase, reaching 31,887 units, solidifying GM’s status as the #2 EV seller in the U.S. GM’s EV portfolio achieved “variable profit positive” status in late 2024, fueled by scale efficiencies, reduced material costs, and new products like the Cadillac Escalade IQ and Sierra EV. The company anticipates a $2 billion decrease in EV operating losses this year.

Positive Factors Supporting GM

GM is also benefiting from its restructuring initiatives in China, anticipating a return to profitability by 2025. Encouragingly, in 2024, GM hit its goal of a $2 billion fixed-cost reduction. Additionally, by exiting the robotaxi market, the company expects to realize savings of $1 billion annually. GM projects an adjusted EPS between $11 and $12 in 2025, an increase from $10.60 in 2024.

From a financial perspective, GM is in a strong position, boasting $35.5 billion in liquidity, which includes $21.7 billion in cash. In February 2025, the company announced a 25% increase in dividends to commence with the next payout this month. Furthermore, GM has been proactive in buying back shares, successfully reducing its outstanding share count below 1 billion, finishing 2024 with 995 million shares. Recently, GM revealed a $6 billion buyback program, with $2 billion earmarked for accelerated repurchases to be completed by Q2 2025, leaving $4.3 billion for future buybacks.

GM’s Preparedness for Tariffs

As Trump has paused reciprocal tariffs for 90 days, automotive tariffs remain unaffected. A new 25% tariff on auto parts is anticipated next month. While GM produces over half of its vehicles domestically, it still faces risks by relying on foreign parts. The company is engaging with logistics partners to streamline supply chains and implement cost-effective measures, positioning itself well for long-term success despite short-term hurdles.

Evaluating GM Stock Now

Currently, GM stock presents an appealing valuation opportunity. The forward price-to-earnings ratio of 3.76 indicates that GM trades at a significant discount compared to industry averages and its own 5-year trend.

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The Zacks Consensus Estimate for GM’s 2025 EPS has increased by 18 cents over the last month, indicating a 9% year-over-year growth potential.

Wall Street’s average target price for GM stock stands at $58.10, suggesting an upside of over 33% from current levels.

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Overall, GM is positioned favorably with its robust presence in the U.S. market, expanding EV efforts, focus on cost-cutting, and shareholder-friendly actions. Given the current valuation relative to its potential, investing in GM stock may be a prudent choice right now.

The stock carries a Zacks Rank #2 (Buy) and boasts a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.