Explaining Why Ford Motor Shares Fell While Competitors’ EV Stocks Rose

Ford Motor NYSE:F

Ford Motor (NYSE:F)

The share price of Ford Motor (NYSE:F) fell 2.1% at its worst point in trading on Tuesday, as of 1:30 p.m. E.T.

The company’s August sales figures again validated the exponential growth of Ford’s E.V. sales in recent months. As the global E.V. sector develops, partly due to the Inflation Reduction Act (IRA) in the United States, one analyst sees much greater potential in Ford’s competitors.

What’s the Reason?

Until this morning, Wolfe Research analyst Rod Lache predicted that E.V. penetration would reach 10% in the U.S. and 17.5% globally by 2025. Due to the IRA, Lache expects E.V.s will account for 20% of the U.S. passenger car sales market and 22% of the global market by 2025.

Significant tax credits for E.V.s are proposed in the Inflation Reduction Act, which was signed into law by President Joe Biden in August. These payments are contingent on meeting specific domestic production, assembly, and battery sourcing requirements.

According to TheFly.com, Lache has called the IRA “the most critical development” for the U.S. automotive sector and says auto stock investors still haven’t “completely comprehended” how important the law is to the E.V. business. Today, the analyst raised his price estimates on Tesla (NASDAQ:TSLA) and General Motors (NYSE:GM), driving up their share prices.

On the other hand, Lache did not reference Ford, even though the automaker is currently hitting all cylinders and expecting massive growth through 2026.

Ford Motor (NYSE:F) E.V. sales, for example, increased 307% year-over-year in August, with the F-150 Lightning pickup truck recording its most excellent month ever. The Mustang Mach-E had a massive increase in sales, up 115% year-on-year.

Ford’s overall sales growth in August was 27.3%, easily above the industry average of 4.8%.

What’s Next?

Despite Tesla’s continued dominance in the electric vehicle (E.V.) market and General Motors’ massive investment in the sector, Wolfe Research’s prediction that Ford Motor (NYSE:F) will come out on top under the IRA seems implausible. In reality, as revealed by the U.S. Department of Energy, Ford’s F-series, Mustang Mach-E, and Escape plug-in hybrid E.V. are all eligible for tax credits under the IRA. When the manufacturing sales cap is lowered next year, popular cars like Tesla’s Model S and GMC’s Hummer pickup and SUV will be eligible for the tax credit.

Despite what Wolfe Research says, I believe Ford Motor (NYSE:F) will become a tremendous wealth-building winner stock given the current climate and the investment it is making in electric vehicles.

Featured Image-  Megapixl @Neydtstock

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About the author: I'm a financial freelance writer keen on the latest market developments which i articulate with writing stock updates, press releases and investor news. As a person i live by the code of a sustainable human existence and a carbon neutral universe. When off work, i spend time reading non-fiction books, flying drones, and outdoor cycling.