GM vs. F: Which Legacy Automaker is a Stronger Play Now?

Core Viewpoint - General Motors (GM) is currently positioned as a more attractive investment compared to Ford, driven by its successful cost-cutting initiatives, positive momentum in electric vehicles (EVs), and improving performance in China, while Ford faces significant challenges in its EV segment and pricing pressures [18][19]. Group 1: General Motors - GM retained its title as the top-selling automaker in the U.S. in 2024, with a market share increase of 30 basis points to 16.5% and annual earnings rising 38% to a record $10.60 per share, with expectations for 2025 EPS in the range of $11-$12 [2]. - GM's EV portfolio became "variable profit positive" in Q4 2024, producing 189,000 EVs last year and aiming for 300,000 in 2025, while reducing EV operating losses by about $2 billion this year [3]. - The company reported positive equity income in China in Q4 2024, excluding $5 billion in restructuring costs, and aims for profitability in its China business this year [4]. - GM achieved its $2 billion cost-cutting target by 2024 and expects $1 billion in annual savings from halting robotaxi development, ending 2024 with total automotive liquidity of $35.5 billion, including $21.7 billion in cash [5]. - GM anticipates a slight decline in ICE wholesale volume in North America, with pricing expected to decline by 1-1.5% year over year, which may pressure margins [6]. Group 2: Ford - Ford was the third-best seller in the U.S. in 2024, selling slightly more than 2 million vehicles, with a strong lineup including F-series trucks and new models like Maverick and Bronco [7]. - Ford ended 2024 with around $28 billion in cash and $47 billion in liquidity, reducing net costs by $500 million in the second half of 2024 and identifying $1 billion in product design cost reductions for 2025 [8]. - Ford's Model e segment incurred losses of $5.07 billion in 2024, with expectations of segmental losses between $5-5.5 billion this year due to pricing pressure and increased investments in EVs [9]. - The Ford Blue division is projected to generate EBIT of $3.5-4 billion in 2025, down from $5.3 billion in 2024, with anticipated declines in ICE vehicle sales [10]. - Ford plans to inject up to €4.4 billion ($4.8 billion) into its German operations to reduce debt and improve competitiveness amid challenges in the European auto industry [11]. Group 3: Comparative Analysis - The Zacks Consensus Estimate for Ford's 2025 sales and EPS implies a year-over-year decline of 4% and 27%, respectively, with EPS estimates trending downward [12]. - In contrast, GM's 2025 sales estimates also imply a 4% decline, but EPS estimates are expected to increase by 9%, with upward revisions over the past 60 days [13]. - GM's forward earnings multiple is 4.06X, below its three-year median of 4.96X, while Ford's forward earnings multiple is 7.25X, above its median of 6.44X, indicating GM's valuation is more attractive [14]. - GM has better prepared for potential tariff impacts by cutting international inventory by 30% and optimizing supply chains, while Ford's CEO warned of significant costs and chaos due to tariffs [17].