General Motors stock price gains after going all-in on electric vehicles

Shares of the U.S. automaker General Motors (NYSE: GM) soared nearly 4% yesterday after the company said it will pull out of the legal battle to ban California from setting its own fuel economy standards.  

Fundamental analysis: All-in on EV

The company sent a letter to environmental groups to inform them about the decision to drop support for the lawsuit. Instead, CEO Barra said the carmaker will support efforts of president-elect Joe Biden to increase the use of electric cars. 

Other carmakers that backed Trump, such as Toyota, are considering their next steps. 

Along these lines, GM committed to increase investments in EV technology. It is also said that it is now working to produce a new battery chemistry to reduce costs of producing EV cars.

This prompted analysts to raise their outlook on GM, with Morgan Stanley analyst Adam Jonas raising the price target to $53.00 per share from prior $44.00.

Technical analysis: New record highs almost printed

Yesterday’s high of $46.71 came just shy of the all-time high of $46.76 printed over 3 years ago. GM share price has been on a tear since August to gain about 85% in less than four months. 

Buyers seem determined to push the price action towards fresh record highs. What may follow, in that case, is profit-taking that will create a pullback in the stock towards the low $40s.

Summary

General Motors said it will not support the Trump administration in the lawsuit against California and will insated increase its investments in EV production.