American electric vehicle (EV) companies like Tesla (NASDAQ: TSLA) and Rivian are underperforming their traditional rivals like Ford and General Motors.
General Motors stock has jumped by more than 25% this year while Ford is up by over 13.6%. On the other hand, EV companies like Rivian and Tesla are down by 55% and 35%, respectively.
To be clear: this trend is not just happening in the United States. Globally, traditional automakers like Toyota, Honda, Tata Motors, Stellantis, and Renault are thriving.
Tesla vs Rivian vs Ford vs General Motors
ICE vehicles are beating EVsThis performance is happening because of the ongoing weakness in the EV market around the world. Data released this week showed that Tesla delivered fewer cars than expected, causing some analysts to issue dire warnings about the company.
EV companies are also struggling from the ongoing crash of used prices. Recent data shows that the prices of most used EVs has continued plunging this year. This decline is partly because of the ongoing liquidation of the thousands of vehicles that Hertz acquired.
The average price of a used Tesla has declined 20 months in a row, moving from a record high of $67,900 in July 2022 to a record low of $31,568 today. That's a 53% decline. $TSLA pic.twitter.com/a9ozpeykz2
— Charlie Bilello (@charliebilello) April 3, 2024Further, there are concerns about the rising competition from Chinese companies like Xpeng, BYD, and Nio. BYD is said to be planning a new plant in Mexico to target American shoppers.
Therefore, with electric vehicles, we have an industry that is showing signs of slowing down and one that is seeing more production.
General Motors and Ford are also struggling in their EV business. However, unlike Rivian and Tesla, they also have a huge hybrid and Internal Combustion Engine (ICE) business.
ICE and hybrids are thrivingThe most recent numbers revealed that Ford sold 38,421 hybrid vehicles in the first quarter, a 42% increase from the same period in 2023. It sold almost 217k gasoline cars during the quarter.
As such, gas-powered vehicles are helping to offset the weak performance of Ford’s EV products. In a statement on Thursday, Ford said that it would delay its all-electric SUV to focus on hybrids. General Motors produced 594k vehicles in the first quarter, most of which were ICE vehicles.
Therefore, GM and Ford stock prices are doing well because the weakness in the EV industry is being offset by ICE and hybrids. Also, these companies have noted the trend in the EV industry and slashed their costs.
They have then shifted these funds to reward their investors. In February, Ford said that it would boost its dividend and share buyback as it slashed its EV investments. Before that, General Motors announced a big $10 billion share buyback and a 33% dividend increase.
The performance of GM and Ford stocks is a reflection that ICE vehicles are not going anywhere anytime soon. Most people continue to be afraid of electric vehicles, because of their higher costs and range issues. A report found that 57% of Americans will not move to EVs in a 2023 study.
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