Traders Bet On GM to Outperform Ford in the EV Race
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Electric vehicles (EVs) will play a big role in the future of the auto industry, with consumer demand and government regulations contributing to their rise. Carmakers are racing to get the best electric models to market, and Wall Street traders are following their every move.
The EV sector is changing the industry, with automakers competing to advance in battery technology, software, and manufacturing processes.
Jerry examines why traders may be placing their confidence in the underdog when looking at the competition between General Motors (GM) and Ford. Chevy, GMC, and other GM brands are on their way to an electric future.
The electric vehicle market
In a conversation with CNBC, two traders gave their perspectives on the relationship between the two automakers’ stocks, and the state of the EV market in general.
They refer to EVs as a “long-term growth driver” and note that the auto market as a whole is poised for significant growth. While the industry slowed down last year, the traders point out that it was caused by supply shortages, not lower demand.
As the supply chain rights itself, the auto industry should experience growth, and electric vehicles are clearly going to be a big part of that development.
GM is the underdog (for now)
In the CNBC segment, the financial experts point out that for this year, Ford has experienced more growth. But that doesn’t necessarily mean that it’s a better pick. One trader describes GM as the “clear favorite between the two.”
Investment firm Wedbush shed light on GM’s strengths in a Business Insider story. EVs rely on advanced technology, including software and battery design. GM is at the forefront of technology development, pledging to increase its investment in EV research and development to $35 million over the next few years. Its Ultium battery technology is an indicator that the company’s investments in EV tech are already panning out.
Wedbush predicts that GM stock will perform more like that of a tech company than a traditional carmaker as it expands its EV offerings and continues to develop its technology. According to Business Insider, one Wedbush analyst set a 12-month price target for GM of $85, up from $58 in early July.
GM’s ambitious plans
A feature on the GM website declares that the company “is on its way to an all-electric future, with a commitment to 30 new global electric vehicles by 2025.” One key development is the Ultium battery technology, which GM predicts will eventually cost 60% less than its current EV batteries.
The company also touts its modular vehicle designs, allowing more efficient manufacturing. The brand is thinking beyond the vehicles themselves—GM will work with EVgo to build more than 2,700 fast-charging stations across the U.S.
Whether you’re closely following GM’s market performance, or just interested in the performance of its EVs, it’s definitely a carmaker to keep your eyes on.
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