Shares of Ford (F, Financial) and General Motors (GM) experienced a notable rise, mainly influenced by political changes involving tariffs and taxes. Ford's stock surged up to 5.6% at one point, reaching $11.19 per share, while the broader indices, S&P 500 and Dow Jones, increased by 2.4% and 3.4%, respectively. General Motors saw its stock climb nearly 3% to $54 per share.
The political landscape shift with the previous administration's focus might benefit traditional automakers like Ford and GM. The administration's lack of interest in electric vehicles (EVs) could see the removal of EV purchase tax incentives, potentially slowing the growth of the U.S. electric car market. This shift could benefit Ford and GM's product strategies as they have yet to profit from EV sales, making their internal combustion engine vehicles more favorable.
Despite the focus on traditional vehicles, Tesla's share (TSLA) rose by 14.5% to $288 per share. Tesla, with its global EV sales and economies of scale, remains profitable even without tax incentives. Additionally, the company's alignment with political figures might offer strategic advantages.
Baird analyst Ben Kallo noted that not all current administration EV policies will change, highlighting that some initiatives could benefit various states. However, the stance on EVs could pose a challenge, leading to a decline in Rivian's (RIVN) shares by 8.3%.
Proposals to reduce corporate tax rates and provide domestic production benefits could favor Tesla, GM, and Ford, as these companies manufacture in the U.S. Potential tariffs on foreign auto imports and Chinese EVs might protect domestic manufacturers from international competition. Such political shifts reduce policy uncertainty, making it easier for investors to anticipate market impacts.
Furthermore, Ford's stand-out performance is partly due to its previous underperformance compared to GM. While GM's shares climbed approximately 17% over the past month, Ford's remained relatively stagnant, creating an opportunity for a rebound.
