Modernising the plants responsible for the manufacture of engines, transmissions and other powertrain components will also preserve up to 1600 jobs.
Sources say that although the news has yet to be made public, the money will be invested at plants in Tonawanda, New York; Bay City, Michigan; Bedford, Indiana; Defiance, Ohio; and St. Catherines, Ontario. The bulk of the money will go towards the aging Tonawanda plant.
The Detroit News reported that the money will assist the plants toward developing next-generation engines for the brand's full-size commercial vehicle (pickup) range.
As the United States' largest car manufacturer, GM is boosting its spending on more fuel-efficient powertrains emissions control laws grow ever tighter. Customer demand for more environmentally friendly, more fuel efficient cars is also said to be driving the change.
"There is no doubt that a major differentiator going forward will be powertrain technology," said Michael Robinet, vice president at research firm CSM Worldwide in Northville, Michigan."Heavy investment and improved fuel economy will be on every company's agenda."
GM CEO, Ed Whitacre will attempt to return the company to profitability as early as this year, a much needed step before the company can make its initial public offering of shares.
At this point in time, the US government owns a 61 per cent stake in GM after assisting its July 2009 exit from bankruptcy.