General Motors Co.'s recently announced cost cutting plan was praised by Wall Street, with analysts applauding the automaker for emphasizing its focus on fast-growing areas such as unmanned and electric vehicles and preventing a downturn in its business.
Some analysts said there are implications for Ford Motor Co.
and Tesla Inc.
including the possibility that Tesla might strike an idle GM plant as the Silicon Valley automaker expanded its car offerings.
See More Information: GM shares fall to session lows after Trump threatens automaker subsidies
on Monday revealed a broad restructuring map that includes closing plans, laying off about 15% of its workforce, and simplifying its line of vehicles in the coming years.
The company said the measures will save about $ 6 billion in the coming years, including about $ 4.5 billion in cost cuts, and promised to channel more resources to stand-alone and electric cars.
GM shares closed on Monday at their highest level in three months, and were returning some of those gains on Tuesday as the stock market plummeted.
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GM is "simply performing," Evercore ISI analysts said in a statement, praising the company for taking "aggressive action" on its legacy businesses to meet the investment demands of unleaded and electric cars as well as change of car scenery. ownership, all without taking years to come up with a plan – a joke at Ford.
Analysts at Goldman Sachs said they expected Ford to be the first to do "significant labor and factory announcements."
Although GM "has proactively made strategic announcements to improve its business in the long run," Goldman still expects "meaningful announcements" from Ford, which could be a catalyst for taking Ford's actions out of the doldrums.
Wall Street caught the attention of Ford executives for months for not taking clearer steps into the future, although Ford has announced some cost-cutting measures and a plan to get rid of all cars on its North American line to to concentrate. in SUVs and crossovers.
GM plans to close factories in Maryland, Michigan and Ohio, as well as a Canadian factory and two plants still to be announced outside the US.
Goldman analysts wonder if Tesla, which will need more production capacity in North America as it plans to transition to the Y model in the next two years, can reach an agreement with GM.
Although "we have no opinion on the likelihood of Tesla making a factory purchase, we believe that GM's announcement was positive for Tesla's shares as it opens another path (outside of new capacity building) to potentially buy a plant for one price ratio. quantity, "analysts said.
Analysts at Morgan Stanley said that while GM could cede US market share and reduce its volume in the short term, the measures were "necessary to ensure GM's long-term sustainability and independence" as a leader in new trends in automobiles and as a great US employer.
The highest cost of the plan, however, may not be the cuts and collapse of the mills, analysts at Morgan Stanley said.
Related: Lawmakers criticize GM over plans to cut jobs, shut down factories
"The labor and political response is likely to be severe," they said.
In a statement, the union said it will "confront" the ruling "through all legal, contractual and collective negotiations open to our membership."
"The headlines around work and government reactions can persist for many weeks and months. The impact on sentiment will likely be the biggest initial cost to GM, exceeding any initial financial cost of restructuring, "they said.
GM shares lost more than 9% this year compared to losses below 0.1% and 0.5% for the S & P 500 index
SPX, + 0.20%
and the Dow Jones Industrial Average.
DJIA, + 0.21%