Comments: China Risk makes GM and Fords weakness, and analysts call on GM to wit

Source: Bloomberg

It was originally thought that this year will be a year when the centennial old store GM and Ford Motors have come back, but the long -term chase of the chase is now stagnant.

As the demand of electric vehicles began to decline, there have been predicts that their powerful gasoline cars will re -win the favor of investors.However, the two downgraded news this week sounded the alarm for investors, making them realize that the two companies were facing increasingly severe challenges: Chinese buyers' interest in American cars weakened, and high prices made it difficult for American consumers to be difficult for American consumersUnderly, traditional car manufacturers need to raise a lot of funds to build infrastructure required for electric vehicles and autonomous driving technology.

China's prospects are so dim, so that a analyst said that GM should consider exiting China completely.Even before the recent stock price boom dissipated, the price -earnings ratio of the two companies was already the lowest among the S & P 500 index.All these factors are promoting the re -adjustment of Wall Street.

"The market rose expands and the early electric vehicle boom has faded to GM and Ford's stocks," said Cole WilcoX, the investment portistor manager of Longboard Asset Management."However, from a greater perspective, these companies have no strategies for the development direction of the world, that is, software and autonomous driving. They are just commodity business at best."

GM's stock price faces the risk of quarterly declines after three consecutive quarters.Ford's stock price fell 13%at the same time.The electric vehicle giant Tesla performed much better, and the stock rose nearly 30%during this period.

Tesla's stock price rose sharply before the arrival of Robotaxi Day on October 10, which was expected on October 10, it is expected that the company will launch its autonomous driving technology.Although Tesla will announce the sales data of the three -month sales as of September next week, Robotaxi Day is the main focus of investors' current attention.Analysts have recently raised their expectations and pointed out that China's electric vehicle sales have surged.

This makes Tesla and traditional car manufacturers differentiate, but this is only temporary.Analysts said that in view of China's huge automotive production capacity, it is difficult for any American company to keep China's market share.Some people warn that more importantly, Chinese competitors may soon put pressure on the US market.

China Risk

China, as the world's second largest economy, is the main car production and consumer country.Both Morgan Stanley's Adam Jonas and Bernstein's Daniel Roeska pointed out that China is an important pain point for GM and even other American auto manufacturers.ROESKA may be more bluntly with GM's withdrawal from the Chinese market.When GM held an investor day event on October 8, investors may hear the company's response.

"It is easy for people to think that American cars are the 'fortress' for tariff protection, and China cannot touch it," Jonas of Morgan Stanley wrote in a report on Wednesday."This is wrong."

The analyst said that the excess capacity of Chinese companies does not have to enter the United States directly to hurt American auto manufacturers. When other large profits market pressure rises, multinational automotive companies will "strive to strive for" sales in the United StatesEssence

Bernstein's ROESKA predicts that GM's international business sales will shrink by 35%in the second half of this year because its joint venture in China will continue to be sluggish.He also estimates that the average price of China's joint venture will decline by double digits, and pointed out that the discount has soared to nearly 50%of the price.

"As far as losses are concerned, the Chinese market can't see the end, and it is not clear how they can remedy the continuous and backward performance," the analyst added.

Tesla's market value is almost nine times that of GM and Ford Motors. Its valuation depends to a large extent on the company's potential for the company to become the leader of autonomous vehicles, so the Chinese risk is not so urgent.