04:00 PM EST, 12/03/2024 (MT Newswires) -- General Motors' ( GM ) decision to sell its stake in the Ultium Cells battery cell plant in Michigan is a capital efficiency move for the automaker and a potential sign of cooling electric vehicle demand, UBS Securities said in a note emailed Tuesday.

The company announced Monday that it planned to sell its nearly completed Lansing facility stake to its joint venture partner LG Energy Solution in a deal expected to close in the first quarter of 2025.

GM indicated that it expects to recoup its investment in the plant, which UBS estimates will be roughly $1 billion given total investment was expected to be $2.6 billion. Shares of GM were down 2.6% ahead of market close on Tuesday.

"To us, this is another sign of capital efficiency for GM, and a signal that US EV demand may slow," UBS analyst Joseph Spak and Tim Bush said in a note. UBS has a buy rating and a $62 price target on the stock.

The sale won't change GM's ownership stake in Ultium Cells LLC and also doesn't impact its two other operational joint-venture facilities with LG Energy Solution in Ohio and Tennessee, according to the UBS note. GM said it will continue to leverage the two Ultium Cells plants "to meet growing demand for its electric vehicles."

"Our EV profitability is rapidly improving thanks in part to our strategic decision to build battery cells in the US with LG Energy Solution," GM Chief Financial Officer Paul Jacobson said in a statement. "We believe we have the right cell and manufacturing capabilities in place to grow with the EV market in a capital efficient manner."

GM has about 90 gigawatt hours of capacity between its two Ohio and Tennessee facilities, which UBS estimates should support at least 900,000 vehicles. "So in our view, there was already little need to have much ownership over a third facility," Spak and Bush said.

GM said in October that it delivered more than 32,000 all-electric vehicles in the US during the third quarter, a sequential increase of 46% and a year-over-year jump of 60%.

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