Today, investors are closely watching car stocks, perhaps more than usual. Given the economic rebound we’ve had since the beginning of the pandemic — driven by monetary and fiscal stimulus — car sales have boomed. And not just traditional car sales, but those of electric vehicle (EV) makers in particular.
That said, three of the biggest car makers are among the stocks investors are watching the closest right now. Ford (NYSE:F), General Motors (NYSE:GM) and Stellantis (NYSE:STLA) have moved in divergent fashion today, with Ford and GM down substantially. Stellantis closed the day higher, but was off significantly from this morning’s high.
There are reasons for the declines in Ford and GM. Among these, GM reported earnings today that missed expectations. Part of this miss was due to a whopping $1.3 billion in warranty recall costs, related to the Bolt EV.
However, there’s a potential catalyst investors will be keeping their eyes on with these stocks. Let’s jump into what everyone’s talking about right now.
EV Targets the Focus for Car Stocks
The “Big Three” automakers in Detroit are expected to announce tomorrow some lofty EV goals. President Joe Biden’s administration has been pushing for auto makers to scale up EV production and focus on producing primarily electric vehicles in the near future. The Biden administration’s goal is to get 40% of all new vehicle sales coming from electric vehicles. It appears American car manufacturers are up to the task.
Today, Reuters reported that it’s expected the Big Three will announce a 40% to 50% target for EV sales by 2030. This announcement is expected to placate the Biden administration. Additionally, it will aid these companies in seeking government subsidies to meet these targets. In a bid to gain market share over incumbent Tesla (NASDAQ:TSLA), these auto makers have a lot of work ahead of them. However, should government assistance be available, these auto makers could indeed chip away at creating an EV-only market a few decades down the road.
Experts have suggested that the global EV market could increase from only 2% of global sales today to as high as a quarter of the overall market by 2030. Biden’s move to accelerate the push into EVs is seemingly a bid to keep pace with international EV growth, which has greatly outpaced the U.S. for years.
The Big Three appear to be stepping up and doing their part. Investors will be assessing how big of investments these auto manufacturers will need to make to accomplish their goals. Accordingly, the return on these investments will be a key focal point moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
