The Department of Health and Human Services announced the first contract for ventilator production with GM (NYSE:GM) under the Defense Production Act, which President Donald Trump invoked last month.
The Korean War-era statute can force certain American companies to produce materials that are in short supply in the face of the growing outbreak.
GM’s contract is worth $489.4 million, HHS said in a release, and the car-manufacturer is expected to produce 30,000 ventilators for the Strategic National Stockpile by August.
"GM and Ventec Life Systems are working with speed and urgency to arm front-line medical professionals with the critical care ventilators they need to treat seriously ill patients," GM said in a statement.
"We remain dedicated to working with the Administration to ensure American innovation and manufacturing meet the needs of the country during this global pandemic."
Shares in the car maker were surging on Tuesday afternoon, as an analyst's pessimistic downgrade failed to dent investors' growing optimism about GM's prospects once the coronavirus pandemic fades.
In a note on Tuesday morning, Deutsche Bank analyst Emmanuel Rosner downgraded GM from the equivalent of buy to hold and cut his price target for the shares from $41 to just $25.
Wednesday morning, GM shares gained 69 cents, or 3.2%, to $21.99
