Ford Stock & General Motors Stock Bullish on Electric Vehicle Outlook
Shares of Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) did amazingly well after the stock market bottomed in March 2020, with Ford stock rallying by 121% and General Motors stock advancing 192% by the end of the year.
That momentum has continued in 2021, with Ford stock up by 70% and General Motors stock up by 42% year-to-date. By comparison, the S&P 500 is up 14% year-to-date.
Why the continued strong interest in automaker stocks?
With a semiconductor shortage leaving millions of vehicles parked on the sidelines, investors have focused their attention on automakers that have announced huge capital spending on electric vehicles.
General Motors Company Increases Electric Vehicle Spending by 75%
General Motors recently announced that it will be increasing the amount it spends on electric and autonomous vehicles to $35.0 billion over the next five years. The company has previously said it plans to be all-electric by 2035. (Source: “GM Will Boost EV and AV Investments to $35 Billion Through 2025,” General Motors Company, June 16, 2021.)
It was only last summer that General Motors said it would invest $20.0 billion in autonomous vehicle and electric vehicle programs through 2025. The latest announcement represents a 75% increase over that initial commitment.
General Motors will be using the money to accelerate “Ultium” lithium-ion battery production in the U.S., the commercialization of its “Hydrotec” hydrogen fuel program, the rollout of electric vehicles for retail and fleet customers, and the deployment of self-driving technology.
General Motors Company’s chair, Mary Barra, said the company is targeting annual global electric vehicle sales of more than one million by 2025.
Ford Motor Company Snaps Up Electric Vehicle Charging Firm
Ford Motor Company has also been busy on the electric vehicle front, as it seeks to juice the number of battery-electric vehicles that come off the line to 40% of its global sales by 2030.
Back in February, Ford more than doubled its investment in electric and autonomous vehicles to $29.0 billion. (Source: “Ford Raises Planned Investment in EV, AV Leadership to $29 Billion; Further Advances Turnaround of Global Automotive Business in Q4,” Ford Motor Company, February 4, 2021.)
It had previously committed $11.5 billion toward electrifying its vehicle lineup through 2022. The new number extends the timeline to 2025. The company will spend $7.0 billion on autonomous vehicles and $22.0 billion on electric vehicles.
In May, the company increased its ownership in Solid Power, a Colorado-based company that makes solid-state batteries for electric vehicles. (Source: “Ford Boosts Investment in Solid Power, Aiming to Accelerate Solid-State Vehicle Battery Development for Customers,” Ford Motor Company, May 3, 2021.)
The additional equity investment will help further develop solid-state vehicle battery technology, with the aim of delivering longer-range, lower-cost, and safer electric vehicles.
In June, Ford announced plans to acquire Electriphi, a California-based provider of charging-management and fleet-monitoring software for electric vehicles. (Source: “Ford Acquires Electriphi to Provide Ford Pro Commercial Customers With Seamless Charging and Energy Management,” Ford Motor Company, June 17, 2021.)
Electriphi’s services will be integrated into Ford Pro, a new global business within Ford Motor Company dedicated to commercial customer productivity and developing charging and energy management.
With the acquisition, Ford Pro is targeting $45.0 billion in sales from its commercial fleet operations, which is a crucial part of the company’s customer base.
More and more commercial customers are adding electric vehicles to their fleets. Ford Motor Company believes the depot charging industry will grow to 600,000 trucks and vans by 2030. But there needs to be a reliable infrastructure to make that happen.
After all, there’s more to switching to electric than swapping diesel for an electric plug. For starters, it takes longer to charge electric vehicles than to fill a tank of gas. Managing how, where, and when charging happens will mean developing a whole new electric grid.
This is where Electriphi comes in. The company has developed an integrated software as a service (SaaS) platform that Ford Motor Company will be incorporating into its fleet telematic systems.
With Electriphi, Ford’s commercial customers will be able to monitor their electronic vehicle’s level of charge and other important data, including vehicle routing, maps, weather, and driving patterns.
This acquisition supports Ford Pro’s target of capturing more than $1.0 billion in revenue from charging by 2030. Some elements of Ford Pro’s commercial services have already been introduced and are being expanded in Europe, where Ford has been the leading commercial vehicle brand for six consecutive years.
While some pure-play electric vehicle stocks have taken a hit in 2021, established automakers like Ford Motor Company and General Motors Company have been seeing their share prices ramp up considerably on increased electric vehicle spending.
It’s not just investors who are bullish on the biggest automakers. Wall Street is too, with analysts either reiterating or raising their bullish calls.
General Motors stock and Ford stock have made big gains since the market bottomed in March 2020, but huge capital spending announcements suggest that these gains are just the beginning.