MW Why GM investors seem to like the idea of spending billions to boost U.S. production

By Steve Gelsi

GM's stock climbs as the carmaker's $4 billion investment to expand existing capacity is viewed as a better than building new plants, analyst says

Investors may often frown on carmakers spending large amounts on capital projects, as it means less money returned to them, but they seem happy with General Motors Co.'s plan to invest $4 billion to boost U.S. production, for a couple of reasons.

GM $(GM)$ said late Tuesday that the investment will give it the ability in the next two years to assemble more than 2 million vehicles a year in the United States. That suggests U.S. production will increase by about 300,000 vehicles a year, based on UBS analyst Joseph Spak's note that GM produced about 1.7 million vehicles in 2024.

"While generally auto investments/[capital expenditures] are not viewed favorably by investors given they could limit potential capital returns, this shouldn't be too surprising given the needs to move more manufacturing to the U.S. because of trade policy," Spak wrote in a research note.

The stock surged 2.6% in morning trading and has climbed 6.3% amid a four-day winning streak.

Meanwhile, GM kept its 2025 capital-expenditure target at $10 billion to $11 billion and now expects capex of $10 billion to $12 billion through 2027. The company didn't comment on share repurchases, which it said in early May would be paused given uncertainties about the current market environment.

Also read: Trump offers some auto-tariff relief, but not for carmakers' two biggest concerns

Rather than building more expensive new factories, GM said it plans to increase capacity at existing plants in Orion Township, Mich., Kansas City, Kan., and Spring Hill, Tenn. The announcement comes about two weeks after GM said it would invest $888 million in a Buffalo, N.Y., plant to build new engines used in trucks and sport-utility vehicles.

The overall reshoring effort makes sense, as it can be seen as an endorsement of President Donald Trump's call to build up domestic manufacturing, UBS analysts said Wednesday.

Perhaps an even bigger positive for investors is what GM Chief Executive Mary Barra said in February regarding tariffs: "What we won't do is spend large amounts of capital without clarity."

GM's announcement of a $4 billion capital spending plan could suggest there is more clarity, which will allow the company to start making firmer plans for the future.

And while GM didn't provide a specific framework for how production will be now be split, Spak believes GM's new spending plan will allow it to move more production of highly profitable light pickup trucks to the U.S.

GM's stock has fallen 5.7% in 2025, while shares of rival Ford Motor Co. $(F)$ have gained 8.4% and the S&P 500 SPX has tacked on 2.9%.

-Steve Gelsi

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June 11, 2025 12:01 ET (16:01 GMT)

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