Stephane RochonFord MotorFDON'T BUYOct 27, 2003

Auto sector due for a recovery. Electric vehicles will increase share of market in 2024. Expecting better times ahead for company. 

Going pretty hard in electric, and everything is in place for a transition to EV. EV sales are slowing, inventories building. Good that they locked in a labour contract. As prices go up, people will keep cars longer. He'd prefer Toyota.

Ford's news today about earnings and costs of EV development have scared investors. While it is cheap and likely attractive long term, we think we would prefer to let today's news settle in. Buyers can wait here, we think. But we think current positions can be held, with the decline now embedded. 
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Autos are mired in the UAW strike now. Past strikes tend to be a good time to buy shares, though. He prefers GM over Ford for its higher margins, and its EV program competes well against Ford, though Tesla is the winner in EVs (surprises him). Ford and GM are trading at a reasonable multiple, but Tesla's is much higher, which gives him pause.

Prefers GM (higher margins) than Ford.
Electrification program is better.
Pending agreement with UAW good for business. 

It can't afford to pay expensive labour if it wants to pivot to EVS and compete with Tesla. Unfair but that's the reality. Ford can either outsource or give in and lose some factories.

Has been cheap for 20 years, and can't get out of its own way. PE around 5-6x. Never any growth rate. Can trade it. If you want something exciting on PEG, buy TSLA when it's on its back.

Wells Fargo projects that a strike would cost GM $2.7 billion and Ford $2.4 billion of adjusted EBIT a month. That said, he's not that worried and is not a risk to sell the carmakers. A strike is a one-off event, and the stock market cares only about the future. Also, Biden won't let a strike drag on; cars are a critical industry. Third, these stocks have already come down to absorb a stock. That said, if the strike leads to much higher wages, that would hurt these stocks. Don't rush in to buy these stocks.

He's not happy. He hfears a strike and their EV business is losing too much money. If you already own this, hold. Managers did recently guide numbers up.

Unhappy to see Ford's price cuts today. Can Ford still meet its earnings estimates? It could lead to more price cuts by other makers, but it's a sign that the bloom is off the EV rose, which had to happen.

Should be eligible for the credit. More upside to come.

They had production hiccups earlier this year, but last week they revealed EV sales were up 35% in June. EVs make up a small part of their overall sales though. Traditional gas-car sales are not reflecting recession fears. His favourite car stock. Excellent PE.

You don't need to choose between Tesla and Ford. This isn't an either-or question. He likes Ford for its dividend yield and its agreement to use Tesla's charging network for Ford's EVs. This let shares rise 3 points since late May. Their traditional gas-powered cars spew cash and fuel their EVs.