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In the wake of second-quarter earnings announcements, shares of leading automakers such as Ford Motor Company (NYSE:F), Tesla Inc. (NASDAQ:TSLA), and General Motors Company (NYSE:GM) experienced a downturn on Thursday.
What Happened: Tesla’s shares fell by 2.03%, Rivian Automotive Inc‘s (NASDAQ:RIVN) by 3.13%, and GM’s by 1.91%. Stellantis NV (NYSE:STLA) and Ford suffered the most significant declines at 6.84% and 13.46%, respectively, according to Benzinga Pro data.
Despite a modest 2% increase in revenue, Tesla’s second-quarter earnings per share did not meet expectations. Investors expressed concerns about a lower-than-expected auto gross margin and free cash flow. CEO Elon Musk’s comments about lower volume growth in 2024 also impacted sentiment.
Despite robust second-quarter results, GM’s shares also traded lower due to potential industry pitfalls, including slowing sales in China. Stellantis reported a 48% drop in first-half net profit, citing a challenging industry context and operational issues.
Ford’s second-quarter revenue surpassed Street consensus estimates, but its earnings per share fell short. The company attributed this to increased warranty reserves used to pay for vehicle issues. However, Ford expects recent initiatives to improve quality and vehicle launches to help reduce future warranty costs.
“Our underlying quality is improving, and Ford Pro is showing the huge upside we’ve got in all our businesses,” Ford CEO Jim Farley said.
Why It Matters: The automobile industry has been pulling back on investing in electric vehicles due to high costs and inconvenience.
Automakers are also struggling to compete in China’s burgeoning EV market, despite new tariffs on Chinese electric vehicles. This is significant as China’s EV market represents over 40% of new passenger cars sold in the country.
Furthermore, consumer preferences and OEM investments have shifted from electric vehicles (EVs) towards hybrids due to high costs, sparse charging infrastructure, and politicized adoption.
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Image via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
