Ford Motor Co. (NYSE: F) shares are up 33% this year and General Motors Co. (NYSE: GM) are up 41%. The S&P 500 has risen 16% in that time. The two companies were expected to be losers as they continued to lag behind the injured Tesla Inc. (NASDAQ: TSLA) in the U.S. electric vehicle (EV) market, and have the most modest presence in China and the European Union. Tesla may be suffering, but it still has about 45% of the electric vehicle market share in the United States. GM and Ford are closer to 10% each. In China, the world’s largest electric vehicle market, the two American auto giants have almost nothing.
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Shares of Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) are outperforming the S&P 500 this year.
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They were supposed to be losers, as Ford and GM trailed Tesla Inc. (NASDAQ:TSLA) in electric vehicle market share.
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The “victory” for Ford and GM is that they are the kings of fossil fuels in a nation that consumes them. The EV market is dead, largely thanks to the end of the $7,500 federal EV tax credit. iSeeCars research says EV sales as a percentage of total U.S. new car sales fell from 8% in the third quarter to 4% in the fourth quarter. It will remain at that level until 2026, the research company predicts.
GM and Ford have spent billions of dollars developing electric vehicles, only to find that their legacy businesses are extremely healthy. In fact, its main products are full-size pickup trucks, symbols of gasoline-loving American drivers.
One of the reasons GM and Ford got it wrong about EVs was that buyers still care about range (300 miles for most EVs) and the number of charging stations. Also of concern are excessive tire wear and engines that are not fully loaded in very cold temperatures. Some Americans don’t know how electric vehicles work, which is another drawback.
On the other hand, the average price of a gallon of regular gasoline has dropped to $3. One of the selling points of electric vehicles is that they save money on fuel. While that may be true, it’s not as true as it was when gas was $5 a gallon, around the same time Russia invaded Ukraine. The world is awash in cheap oil, with prices falling to $60 a barrel.
Add to the gas argument that, by some estimates, there are 175,000 gas stations in the United States (many of which have convenience stores). Filling a car with gasoline takes 10 minutes. Electric vehicles take longer to charge, if people can find a charger.
As a bonus, the dislike many Americans have for Tesla CEO Elon Musk has caused some people who might have bought Tesla cars to stick with combustion-engine ones.