Legacy Autos Claim Their EV Premium After Missing 2020 Rally – Bloomberg


General Motors Vehicles At A Car Dealership Ahead Of Earnings Figures

Photographer: David Paul Morris/Bloomberg

The big three Detroit automakers beat Tesla Inc.’s quarterly stock gains for the first time since the second quarter of 2019 after shares in the legacy car companies rose on aggressive plans to compete with the electric carmaker.

If 2020 was the year when Tesla’s colossal stock gains put smaller electric-vehicle startups into focus, 2021 has so far been all about traditional automakers embracing the electrification trend.

General Motors Co., Ford Motor Co., and Stellantis NV — the owner of Fiat Chrysler — all announced plans to shift into EV technology during the March quarter, joining a growing list of peers including Volkswagen AG and BMW AG in trying to convince investors they too offer exposure to the industry. But the moves have introduced yet another element of volatility that analysts say makes it harder to predict where the nascent sector might be headed next.

Among the best performers, shares of GM, Ford and Volkswagen have gained at least 35% since the start of the year, while Tesla has retreated 5.4%. The last time Tesla underperformed Detroit automakers was in 2019 when sentiment was suffering after an ugly first-quarter result. That was also the last time Tesla underperformed the Stoxx 600 Automobiles & Parts index, which gained 19% this quarter.

Detroit carmakers race ahead as Tesla cools after dizzying run

“What we have here is a market that has broadly accepted that vehicle electrification is going to occur, but is struggling to properly price that,” JMP Securities analyst Joseph Osha said in an interview. “The market has now moved from ‘we will buy anything that smacks remotely of EVs’ to ‘who do we really think will be successful here.’”

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Osha said it’s hard to tell if the recent outperformance by incumbents will last, but that within the group GM and Volkswagen are the only ones to move decisively into electric vehicles.

The rush of EV announcements comes as U.S. President Joe Biden has pledged to promote clean transportation, including initiatives to build more than half a million charging stations by 2030, restore the full EV tax credit and institute stricter regulations that would encourage the use of electric cars. Plans to replace the federal fleet with EVs is also a central component of his new infrastructure spending bill.

“Given the Biden administration’s focus on decarbonization, and combined with increased commitment by automakers, we believe a greater focus on electrification could emerge in the U.S.,” Credit Suisse analyst Dan Levy wrote in a March note. The analyst estimates fully electric vehicles will account for a third of auto sales by 2030.



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