Traditionally slow automotive firms continue to fight for the attention of electric vehicle investors. General Motors (GM) and Ford (F) risk trading back at 2021 lows despite their value rising. Governments are fully committed to investing in EV charging stations, infrastructure, and encouraging consumers to buy EVs.
The government push will accelerate consumer adoption of EVs. Furthermore, Tesla (TSLA) is still a hot brand and a good product. EV investors treat Tesla as a software company for a good reason. It is developing autonomous driving.
GM and Ford not only need to run their gas-powered vehicle business profitability. It must also invest billions in the next few years to develop an EV business. GM increased its commitment to Cruise by buying Softbank’s stake for $2.1 billion.
Markets speculated that Ford would spin-off its EV division to maximize shareholder value. The structural change would not have increased shareholder value. Investors would end up holding Ford’s slow-growing core business and get a distribution of the EV business.
Ford’s EV unit will lose money for the next few years. It decided to split its operations into two segments. This will improve Ford’s focus on EV. Still, it fattens the management layer. As a result, Ford stock trades at a discount because business growth will take a few years.
