General Motors (GM) has announced a shift in its plans for electric vehicles (EVs) and self-driving cars due to new labor agreements in the U.S. and Canada, which will incur approximately $9.3 billion in costs. Despite this setback, GM intends to repurchase up to $10 billion of its shares and increase its dividend by 33%. This buyback, amounting to nearly a quarter of its common stock at current market prices, follows a decline in GM's shares earlier in the year, though they saw a 10% increase to $31.92 after the announcement.
The company has adjusted its 2023 profit expectations downward following the U.S. strike by the United Auto Workers (UAW). GM has faced challenges in boosting its stock price amidst various issues, including the UAW strike, difficulties within its Cruise self-driving vehicle division, and delays in the rollout of new electric vehicles.
The $9.3 billion in additional costs over the next several years stems from agreements with the UAW and Canadian union Unifor, averaging about $575 per vehicle over the duration of the deals. Analysts, such as Daniel Ives from Wedbush Securities, view the outlook positively, considering it a strong move forward for GM following the UAW ordeal. They emphasize the importance of GM getting back on track, highlighting this as a promising start.
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