After peaking at $25.87, Ford (F) dropped sharply. It failed to hold a post-earnings rally earlier this month. General Motors (GM) also spiked to a $67.21 high to start 2022. GM stock risks closing at new lows in the days ahead.
What happened?
The truck freedom convoy blockage at the Ambassador Bridge heightened supply shortages for the automotive industry. Ford and GM rely on deliveries going through this bridge. Furthermore, the industry’s chip shortage limits output for all automotive firms.
Specifically, Ford warned investors the shortage would hurt 2022 revenue. It distracted shareholders by offering electric vehicle delivery targets nearly a decade from now. The astute investor will realize that Ford needs to increase capital expenditures to increase EV production.
On Feb. 10, Reuters reported that Ford would speed up its electrification of the Lincoln brand. This should lift margins because Lincoln is a premium brand. Still, Ford faces stiff competition and is still late. For example, it would not have a Lincoln Aviator until late 2024. Tesla (TSLA) already has a premium Model X on the market for years. Lucid (LCID) is in the early phases of selling a premium Lucid Air.
GM has an equally ambitious EV strategy. GM has an edge because it issued a confident outlook for 2022. Specifically, GM will post a strong adjusted EBIT, despite higher investments adding to costs. By 2025, the firm should report at least 20% of sales from EVs.
