General Motors (MTLQQ) a.k.a GM has announced its plan to invest $23.5 million in its Baltimore Transmission Plant in order to boost its electric vehicle components. This comes on top of the automaker’s announcement in January to invest $246 million at the Baltimore site to build electric motors for hybrids.
The $246 million investment in the site was attributable to GM’s decision to manufacture the electric motors in-house at lower costs rather than purchasing them from suppliers. Production of electric motors at the site will begin in 2013.
Last month, GM filed the first batch of paperwork required to hold an initial public offering (IPO) of the stock, tentatively scheduled for mid-November. The company will sell preferred shares, the proceeds from which will be utilized for repaying government loans as well as for general business purposes.
The IPO will allow the stakeholders of the company to sell off their shares. However, no dividend will be paid on the common shares.
Although the IPO will allow the U.S. Treasury to begin selling the 61% stake it holds, GM clearly stated in the filing that the U.S. Treasury would continue to own a substantial interest in the automaker following the IPO.
In the second quarter of the year, GM recorded a profit of $1.3 billion or $2.55 per share compared with a loss of 12.9 billion or $21.12 per share in the second quarter of 2009, when the automaker was in the midst of bankruptcy filing.
The profit was attributable to the company’s aggressive cost reduction measures and streamlining of operations since its exit from the bankruptcy protection. The automaker relied heavily on rental-car, government and corporate fleets to drive sales, which are, however, less profitable than retail sales.
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