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Ford, GM combine today’s challenges with tomorrow’s promises

DIGEST – Synthetic engine and Ford It is expected to report next week that it posted solid returns for the final quarter of 2021, but rarely past performance is less important to investors.

The two Detroit automakers are in the midst of taking the leap between their combustion-powered present and a future they’ve promised will be defined by tram and software support services.

Both companies have outlined multi-billion dollar investments in new electric vehicles in North America and the battery factory, aim to challenge Tesla and a cluster of smaller electric vehicle startups in the still tiny market. But these new plants won’t be at full capacity until the middle of the decade.

Although GM and Ford were once global auto giants, their market capitalizations having been shortened by electric vehicle maker Tesla. On Wednesday, Tesla reported higher-than-expected revenue and profit for the fourth quarter of 2021, but warned that supply chain bottlenecks will continue into 2022 and could put manufacturers at risk. Their machines cannot operate at full capacity.

GM sold fewer cars last year in the United States than Toyota Motor Corpfor the first time in 91 years GM is not the number 1 best-selling automaker in its home market.

GM and Ford profits in 2021 boosted by consumers’ willingness to pay record prices for gas-powered products pickup truck and SUVs. In 2022, analysts fear Detroit producers will face a more uncertain economic environment, including rising interest rates, high oil prices and continued supply chain bottlenecks can reduce output.

Analysts expect both companies to be cautious in their outlooks for 2022. Semiconductor shortages are expected to hit production in the second half of the year, Bank of America wrote in a note. note.

“While auto manufacturers will enjoy production resilience and inventory stockpiling, these(es) could go hand in hand with price declines, mixed downturn, rising input costs.” Morgan Stanley said.

Ford told investors in its third-quarter report that it expected $1.5 billion in higher costs of goods and saw inflationary pressures across a range of costs.

Wall Street has shown more confidence over the past few months in Ford CEO Jim Farley’s efforts to promote the company. electric pickup truck and valve programs. Ford’s market value hit $100 billion in mid-January, surpassing GM’s for the first time in more than five years. But Ford’s market value, with quarterly results expected Thursday afternoon, fell 20% after the company issued a convoluted guide to its 2021 profits.

GM’s CEO Mary Barra Expect a simpler story to tell on Tuesday of fourth-quarter and full-year results. GM chief financial officer Paul Jacobson told investors in December that the company expected adjusted pre-tax profit for 2021 to hit $14 billion, higher than previous forecasts.

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