empty
22.11.2021 12:21 PM
How can Ford and GM close the gap with Rivian?

This image is no longer relevant

Automakers of the old school should be envious of the inflated estimates of startups in the field of electric vehicles. At one point during the previous week, Rivian Automotive was worth the same as Ford Motor and General Motors combined.

Perhaps, there is a way for traditional automakers to overcome this valuation gap. In order to address such a problem, Barron Michael Berry of Scion Asset Management said that Ford and GM need to create inventory tracking for their next-generation vehicles, such as electric cars, robo-taxis, etc.

This will make it possible to track the financial performance of a particular business unit. The shareholders of the tracked shares have a financial interest only in the tracked division, and not in the entire business.

Let's put it this way: It costs several billion dollars to build a new electric vehicle manufacturing plant that could produce, for example, 500,000 electric vehicles a year together with batteries to power them. This is less than 1% of the market capitalization of Tesla (TESLA), but about 5% to 10% of the capitalization of Ford or GM.

Car manufacturers are too complex: many manufacturing plants perform several jobs for other factories in the network.

Nevertheless, inventory tracking is quite possible. For example, Liberty Media Formula One (FAN) tracks the financial performance of the Formula One racing series. Back in 1984, General Motors conducted the first inventory tracking for Electronic Data Systems, or EDS, Ross Perot.

How to estimate Ford or GM tracking stocks? The possibilities are tempting.

Like Rivian, Ford is launching an electric vehicle truck and is already selling the Mustang Mach E electric vehicle. If the company achieves its goals, Ford's electric vehicle business should be about four times larger than Rivian's by 2023.

This image is no longer relevant

GM is essentially the second largest electric vehicle manufacturer in the United States, after Tesla. The global volume of GM electric vehicles is about 300,000 units, taking into account the sales of GM joint ventures in China. Given that Lucid costs almost the same as GM and plans to sell approximately 20,000 units in 2022, the cost of GM's electric vehicle company could be several times higher than Lucid's.

This image is no longer relevant

If all electric car companies and electric car tracking stocks were valued like some electric car stocks, the auto industry's valuation could easily exceed $4 trillion.

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The Fed Needs More Time to Assess the Situation

While Donald Trump is attempting to reach an understanding with China, Federal Reserve Governor Adriana Kugler stated that the current tariff policy is likely to exert upward pressure on prices

Jakub Novak 10:05 2025-04-24 UTC+2

Powell Can Sleep Soundly

Markets responded with gains, and the US dollar strengthened against the euro and other risk assets after US President Donald Trump said he had no intention of firing Federal Reserve

Jakub Novak 09:59 2025-04-24 UTC+2

The Markets Have Likely Already Passed the Bottom of Their Decline (there is a chance of continued decline in EUR/USD and GBP/USD)

While markets remain focused on trade wars, particularly between the U.S. and China, incoming economic data indicate persistent structural problems in the advanced economies of Europe and the United States

Pati Gani 09:38 2025-04-24 UTC+2

What to Pay Attention to on April 24? A Breakdown of Fundamental Events for Beginners

Few macroeconomic events are scheduled for Thursday, but yesterday's developments showed that the market continues to ignore the majority of data releases. Only a handful of reports are lucky enough

Paolo Greco 06:05 2025-04-24 UTC+2

GBP/USD Overview – April 24: Didn't work out? So be it...

On Wednesday, the GBP/USD currency pair managed to avoid a substantial decline, although the day before, it seemed that a downtrend was finally beginning. However, the market quickly bounced back

Paolo Greco 03:16 2025-04-24 UTC+2

EUR/USD Overview – April 24: Is it really about Powell?

The EUR/USD currency pair refrained from continuing its decline on Wednesday. As the saying goes, "Everything in moderation." The dollar gained around 200 pips on Tuesday, which shouldn't scare anyone

Paolo Greco 03:16 2025-04-24 UTC+2

The Kiwi Has a Decent Chance to Continue Rising

Inflation in New Zealand in Q1 came in slightly above expectations, rising from 2.2% to 2.5% year-over-year. This was mainly due to the goods sector, while core inflation is slowing

Kuvat Raharjo 00:59 2025-04-24 UTC+2

The Pound Holds On, but a Reversal Is Near

Inflationary pressure in the UK is gradually easing but remains elevated. In March, the core index fell from 3.5% to 3.4% year-over-year, while the headline CPI dropped from 2.8%

Kuvat Raharjo 00:59 2025-04-24 UTC+2

The Euro Takes a Hit Below the Belt

There will be no winners in trade wars. The U.S. will suffer due to a loss of trust in the dollar and other American assets, while Europe will suffer from

Marek Petkovich 00:59 2025-04-24 UTC+2

GBP/JPY. Analysis and Forecast

The GBP/JPY pair is retreating from the psychological level of 190.00, or a two-week high reached earlier today. Following disappointing UK PMI data, selling pressure has intensified, pulling spot prices

Irina Yanina 18:16 2025-04-23 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.