GM, Ford Earnings On Tap As EV Push Continues

General Motors (GM) and Ford Motor (F) tee up to report for a third quarter that saw a fresh hit to production due to a worsening chip shortage, which largely spared Tesla (TSLA). GM stock and Ford stock fell near buy points on Tuesday.

On Tuesday, GM said it will work with its dealers to help build 40,000 EV chargers across the U.S. and Canada.

Auto giant GM says it’s continuing to speed up development of electric cars, a day after Tesla became a trillion-dollar company. Earlier in October, GM promised investors looking for the next Tesla that it would surpass that rival in EV sales in a few years.

Meanwhile, investors will be looking for guidance from GM and Ford on the production outlook and chip shortages.

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GM Earnings

Estimates: Wall Street expects GM earnings to dive 65% year over year, to 98 cents per share, according to FactSet. Revenue is seen falling 13.5% to $30.722 billion.

In Q3, GM’s new vehicle sales in the U.S., its biggest market, fell 32.5% amid factory shutdowns due to the chip shortage. But average transaction prices rose 16% to $50,550, according to Edmunds data, as it benefited from higher demand for pickup trucks. In China, GM’s Q3 sales fell 19%, also due to the global chip supply shortage.

Results: Check back later.

Outlook: In early August, GM hiked 2021 EPS guidance to $5.40-$6.40 from $4.50-$5.25 prior. Wall Street sees 2021 EPS of $6.41, FactSet says.

But over the course of Q3, both GM and Ford shut down several North American factories again due to the global chip shortage, including plants making highly profitable trucks and SUVs. Some idled plants reopened in October, but the automakers also announced more production cuts.

Meanwhile, GM continues to ramp up on electric vehicles to woo investors, who are on the lookout for the next Tesla.

Earlier in October, GM took direct aim at Tesla while promising a doubling of revenue by 2030. It plans to build subscription services around increasingly electric vehicles.

And on Oct. 12, General Motors said partner South Korea’s LG Electronics would reimburse it $1.9 billion in costs for recalling 143,000 Chevy Bolt EVs, due to a battery defect that led to higher fire risk. As a result, GM said, it would see a recovery in its Q3 earnings to offset recall charges.

Through 2025, GM plans to invest $35 billion in electric and autonomous vehicles. It plans to go all-electric by 2035 and made key deals with EV battery and lithium suppliers in Q3.

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GM Stock

Shares eased 0.8% to 57.28 in Tuesday’s stock market trading. GM stock briefly retook a 58.70 buy point from a double-bottom base Oct. 22, but is back below the entry now, according to MarketSmith chart analysis. It has since formed a handle, giving GM stock a 59.44 buy point.

Much of the double-bottom base formed below the 50-day or 10-week line, a negative. And the relative strength line for GM stock is lagging, well below the consolidation peak. The RS line is the blue line in the chart shown. A rising RS line means a stock is outperforming the S&P 500 index.

Ford Earnings

Estimates: Year over year, analysts see Ford earnings tanking 59% to 27 cents a share. Revenue is seen rising 1.9% to $38.213 billion.

In Q3, Ford’s new vehicle sales in the U.S. fell 27%. But average transaction prices rose 13% to $51,460, according to Edmunds data, benefiting from higher demand for pickup trucks and SUVs. In China, Ford’s Q3 sales fell 9%. In Europe, its Q3 sales fell 35%.

Results: Check back later.

Outlook: Wall Street sees 2021 EPS of $1.57, FactSet says. Ford had raised its EBIT and free cash flow outlook in July, citing improving chip supplies.

Ford Stock

Shares of Ford fell 0.6% to 15.91 in Tuesday’s trading. Ford stock topped a 16.55 buy point Oct. 21 but is back below the entry. Investors also could use the Oct. 21 intraday high of 16.70 as the start of a high handle, offering a 16.80 entry.

Ford, like GM, is managing through the chip crisis while investing billions to develop electric vehicles. Ford’s building key EV alliances as well.

Fossil-fuel cars underpin current revenue and profits for traditional automakers. So their EV shift brings risk as well as the potential for big rewards.

Find Aparna Narayanan on Twitter at @IBD_Aparna.


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