{"id":33366,"date":"2022-10-10T18:08:23","date_gmt":"2022-10-10T22:08:23","guid":{"rendered":"https:\/\/autosector.com\/?p=33366"},"modified":"2022-10-10T18:08:23","modified_gmt":"2022-10-10T22:08:23","slug":"why-are-gm-gm-and-ford-f-stock-prices-falling-today","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=33366","title":{"rendered":"Why are General Motors (GM) and Ford (F) stock prices falling today?"},"content":{"rendered":"

Share prices of several popular automakers are under pressure after UBS analyst Patrick Hummel warned investors Monday that the US auto industry will likely face hurdles ahead. Both General Motors<\/a> (GM) and Ford <\/a>(F) stock prices are down today on the news as investors grapple with what\u2019s next for the US automakers.<\/p>\n

GM and Ford stock prices fall on analyst comments<\/h2>\n

As concerns over the global economy escalate, US automakers know all too well the consequences a slowdown can have on business. <\/p>\n

Despite positive developments in the third quarter, analysts forecast the industry will put on the brakes sooner rather than later. In a research note<\/a>, UBS\u2019s global head of auto research, Patrick Hummel, wrote that \u201cdemand destruction is no longer an unexplained risk, but has begun to become a reality.\u201d <\/p>\n

Although demand for electric vehicles has never been higher, GM and Ford are both tied to sales of gas-powered vehicles until they can scale production and satisfy the growing consumer preference for EVs.<\/p>\n

After almost three years of controlling prices, widening margins, and free cash flow, the auto industry may be due for a drastic change, according to analysts. <\/p>\n

Rising costs are already starting to cut into margins as Ford has already prepared investors for an additional $1 billion in supply chain costs, causing its stock to plunge. The automaker says parts shortages and rising input costs affect high-margin segments such as trucks and SUVs. <\/p>\n

GM described a similar situation in July, citing vehicles waiting on certain parts sitting in its inventory. That being said, both automakers have reaffirmed their earnings estimates for the year.<\/p>\n

The auto supply chain was decimated during the pandemic and has yet to recover. As a result, GM and Ford stock prices rose to all-time highs as shortages drove new vehicle prices up, leading to higher margins. Analysts believe the situation may flip in the coming months.<\/p>\n

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Chevy Silverado EV (left) Ford F-150 Lightning (right) Source: Chevy\/Ford<\/figcaption><\/figure>\n

What\u2019s next for US automakers<\/h2>\n

Even though Ford is ahead of GM in terms of EV sales, UBS believes the latter will catch up, stating:<\/p>\n

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Ford\u2019s EV execution has been solid with a steep sales curve, but GM is likely to catch up fast in 2023.<\/p>\n<\/blockquote>\n

Ford\u2019s EV sales rose 197% in September<\/a> from last year on robust Mustang Mach-E<\/a> sales and growing interest in the F-150 Lightning<\/a> pickup and E Transit<\/a> commercial van.<\/p>\n

Although UBS likes GM better, citing fewer production setbacks in Q3 and a more aggressive EV approach, the financial firm still sees a weak market coming, saying:<\/p>\n

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While we continue to like GM\u2019s EV momentum in 2023 with a strong launch pipeline, the overall sector outlook for 2023 is deteriorating fast so that demand destruction seems inevitable at a time when supply is improving.<\/p>\n<\/blockquote>\n

UBS downgraded Ford stock to sell while lowering GM to a neutral rating. The analysts were much more upbeat about EV leader Tesla, saying the automaker will likely continue its aggressive growth by taking cost-cutting measures.<\/p>\n

Electrek\u2019s Take<\/h2>\n

Ford or GM, who will come out on top in the long run? UBS seems to think GM will with its EV for everyone<\/a> strategy. The big question as we advance will be how well these automakers can align their portfolio to accommodate the consumer. <\/p>\n

There\u2019s a clear trend underway in the auto industry toward electric vehicles. GM is going all in on EVs with plans to launch an electric car for every type of driver. <\/p>\n

On the other hand, Ford has committed to breaking up its business into three segments to support its transition \u2013 one segment for gas-powered vehicles, one for EVs, and another for its business tools. The latter two will both be used to boost growth and production of the company\u2019s EVs.<\/p>\n

GM\u2019s Ultium Platform<\/a> will likely be a game changer for the automaker, supporting a wide range of electric vehicle models and sizes.<\/p>\n

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