In the last 10 years, General Motors (GM) and Ford (F) both enjoyed seasonal strength. Their share price
would start rising from September through the fourth quarter. Since July, shares of the automotive firms
rallied. This could continue.
The Detroit Auto Show marks the start of a bull phase for ICE stocks. Ford gets the most attention. It
gained media praise with its electric vehicle, the Mustang Mach-E. The company followed with variants
of the expensive F-150 electric truck.
Ford is uniquely positioned for growth in the EV market. The EV truck does not have any meaningful
competition. Rivian (RIVN) has a limited output and is not a threat. Tesla (TSLA) does not have a
cybertruck ready for the market.
General Motors has a less compelling EV product line-up. Still, it re-instated its dividend. The 9 cents a
share token dividend is a start. It signals that management is confident its ICE business will increase free
cash flow.
GM’s EV investments will not dry up its cash flow. GM sees electrification as one of two big megatrends.
Secondly, e-commerce is a megatrend. As consumers buy groceries on Amazon (AMZN), for example,
GM has an opportunity to sell EV fleets.
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