It's been another week, and Trump's return to the White House is giving analysts new insights into Detroit's automotive entities. Also, a Tesla Bull expects Elon Musk's Beltway affair to work wonders for his bull case for Tesla stock.
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Ford (F) CEO Jim Farley has very lofty expectations for the automaker's future, but as a racing fan, he has some pretty high-performance goals for the Blue Oval.
In recent years, it has become a tried-and-true performance brand, providing customers with a range of high-octane models of its popular cars, SUVs, and pickup trucks, including the F-150, Ranger, and Bronco Raptor models, the Mustang Mach-E Rally, and the ultra-limited-edition Mustang GTD.
In a recent interview, he expressed wanting to increase Ford's presence in the off-road vehicle market, which already accounts for 20 percent of the roughly 2 million vehicles it sold last year. However, he has an even higher goal.
“Ford wants to be the No. 1 undisputed off-road brand in the world,” Farley told Automotive News. “We want to be the Porsche of off-road.”
In recent months, Ford stock has been inflated by the brand's prime positioning in the EV market, which was set up for a market ready to gobble up EVs.
However, that hasn’t exactly happened. Continued losses in Ford's Model E division showed that demand for EVs has not exactly met expectations, and the combined threat of a second Trump administration doesn't make a good recipe for a company that has invested a lot of money in electrification.
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Even though Ford's Ford Pro commercial vehicles division continues to post strong financial results, high warranty costs, and soaring inventory levels threaten the mainstream Ford Blue division; it is no surprise that another analyst has downgraded its outlook on Ford stock.
In a new analyst note, Barclays' Dan Levy lowered the firm's price target on Ford stock from $13 to $11 and downgraded its rating from Overweight to Equal Weight, citing the automaker's challenges, including its elevated inventory levels.
“Regardless of how much Ford can justify its elevated inventory, the current situation means that Ford will have sharp volume headwinds in ’25 — especially when considering that 2025 will see the non-repeat of inventory replenishment, which benefited 2024,” he wrote.
“Ford’s inventory issue, in our view, will cast an overhang on earnings until it is clearly resolved, as elevated inventory will keep the risk of an adverse turn in pricing elevated.”
Additionally, Levy noted that headwinds related to volume and price could limit any potential upside for Ford shares, especially as the stock’s current valuation no longer excites investors.
“Barring a positive surprise on ’25 cost-outs, we see little reason for investors to get excited on the case for Ford fundamentals,” he said.
Ford is expected to announce its Q4 2024 results on February 5.
Trump Administration threats already baked into GM stock price, says Deutsche analyst
If there is any Detroit automaker that seems very prepared for what the new Trump administration throws at them, it would be none other than the biggest of the big three: General Motors.
On the evening of November 19, sources close to Trump’s transition team told Reuters that the incoming Trump administration is strongly considering rolling back the Biden-era corporate average fuel economy standards (CAFE standards), which would require passenger cars and light trucks across the industry to hit as high as 50.4 miles per gallon by 2031.
Though Trump has mentioned in his first few days in office the repealing of what he calls the "Biden EV Mandate," the fine print in some of the many executive orders he signed signals that the administration is well on its way to rolling back the environmental protections in place.
However, during remarks at the UBS Global Industrials and Transportation Conference in Manalapan, Florida, in December 2024, General Motors CFO Paul Jacobson noted that GM's EV plans will still proceed. Still, if regulations are eased during Trump's second term in the White House, plug-in hybrids for 2027 may be on the chopping block.
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"In a world where compliance is eased, you could see where you don’t necessarily need as much plug-in, you might not need as much (battery electric vehicles) as well. But we’ll cross that bridge," Jacobson said. “We’ve always said that the plug-in hybrids were really [...] an option for compliance with regulatory standards. So in the event that those change and you don’t need that or they’re lessened, then maybe that could be something we could look at: Getting down some of those models."
In a new analyst note published January 21 by Deutsche Bank analyst Edison Yu, the firm's rating on GM stock was upgraded from Hold to Buy, and its price target was raised from $56 to $60. Yu noted that the risks from Trump's presidential comeback have already been baked into the stock price.
"While there are concerns about the cycle and potential policies of the new Trump administration, our view is that these risks are already very well-known, and there’s room for positive surprises (e.g., pricing holds up better, no Mexico tariffs, etc.)," Yu wrote. "With GM stock having outperformed Ford significantly last year, we could envision 2025 being directionally similar."
Related: Trump's trade policies may ruin this emerging new car segment
Though Trump's proposed "Day 1" 25% tariffs on goods from Canada and Mexico have been given a February 1 due date, Yu is confident GM will adapt. Currently, GM makes US-bound vehicles in factories both in Canada and Mexico, but Yu is adamant that no speed bump will affect its shares.
"GM has consistently executed well in the midst of macro uncertainties, and we think this will continue to position the company well for 2025, amid a lingering [electric vehicle] slowdown, tariff concerns and potential policy changes."
GM is expected to report earnings before the bell on January 28.
Tesla's Golden Age is upon us, says Tesla bull.
Two weeks ago, Tesla's Chinese and Australian websites revealed a brand new, redesigned iteration of the brand's Model Y crossover for 2025.
While the revamped electric vehicle packs many upgrades, such as an incremental range increase, new exterior styling, and an updated interior featuring a host of new technology, fans are divided on the new car. Many Tesla fans are left wondering if the new model is a sufficient 'upgrade' from the outgoing one.
Tesla plans to start deliveries of the new Model Y in the U.S. with a 'fully-loaded,' $59,990 “Launch Series” model that will roll out in March with a whole host of extras, including Full Self-Driving (FSD) software, an Acceleration Boost feature, a tow hitch, and additional customization options like paint color, wheels, and interior trim at no extra cost.
But while Tesla cars are preparing for a new shift, the man himself; Elon Musk has been engulfing himself in a life at the President's hip.
Related: Tesla rival wants to poach EV drivers tired of Elon Musk
Though Musk's Washington presence has been embroiled in controversy (much to gestures of his own making), one Tesla bull remains hyperconfident that the Beltway will treat Musk and Tesla positively.
In a note from Wedbush's Dan Ives, he reiterated his Outperform rating on Tesla stock. He raised the firm's price target from $515 to $550, noting that they have "growing confidence in the demand delivery story for 2025 along with a fast-tracking of the autonomous future under the Trump Administration."
"Our time spent speaking to many in the Beltway the last few weeks give us a growing confidence the Trump White House the next 4 years will be a "total game changer" for the autonomous and AI story for Tesla and Musk over the coming years. Our bull case remains $650 for 2025," Ives said.
With Trump in the White House, the roots of anti-EV regulation are emerging. Still, Ives believes that Musk's strategic placement within the administration can do wonders for Tesla's AI and robotaxi push.
Ives wrote that he believes Musk & Co. could reach a "$2 trillion market cap " by the end of this year on the merit of its autonomous vision, noting their confidence that "Tesla remains the most undervalued AI play in the market today."
"We believe a Trump "regulatory friendly" White House helps unlock autonomous/AI value to Tesla's stock as the autonomous/FSD timeline is likely accelerated starting in 2025 and a major tailwind for Cybercab timing," Ives wrote.
"In a nutshell, there will be an anti-EV focus around emissions standards/removing $7,500 tax credits from a Trump White House and instead now a major laser focus on AI innovation including autonomous technology over the coming years, which is very favorable tailwinds for Tesla as well as other players such as Waymo (Alphabet)."
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