Thank you, Becky. Let's bring in Paul Jacobson, CFO of General Motors. Uh Paul, thanks for joining us this morning on a big day.You beat on the top and the bottom line. You raised your guidance for the fourth quarter. Um even though you made less money in the quarter than the quarter last year due to the impact of tariffs, you've raised your guidance, you know, there's going to be more than a few investors who look at this and they say, given what's happening with tariffs, how are you able to do what you've ...

Welcome back to Market on Close. I'm Sam Bis live from the floor of the New York Stock Exchange. Shares of luxury automaker Ferrari are under heavy pressure today in reaction to announcements at its capital markets a day presentation.The company raised long-term financial targets but was still below consensus estimates. It also slashed its sales guidance on electric vehicles and shares have dropped to six month lows off the back of that. So it is time for overlooked stocks.I'm joined by George Sillis, senio ...

Core Insights - Tesla's third-quarter 2025 delivery numbers increased by 7% year over year, exceeding market expectations of approximately 447,600 deliveries, largely due to a rush of buyers before the expiration of the $7,500 federal EV tax credit [1][2] - The sustainability of Tesla's growth remains uncertain, as the expiration of the EV incentive may lead to a decline in demand, with CEO Elon Musk indicating potential challenges in the upcoming quarters [2][3] Tesla's Challenges - The expiration of the federal EV subsidy is expected to create a demand cliff in North America, compounded by intense competition from Chinese EV manufacturers like BYD [3] - Tesla faces the ongoing challenge of managing expectations for its high-risk ventures, including Full Self-Driving technology and the Optimus humanoid robot [3] Investment Alternatives - Investors may find better value and stability in ETFs focused on legacy automakers such as General Motors and Ford, which have diversified operations across the entire automobile market [4][5] - Legacy automakers can leverage profitable segments like internal combustion engine vehicles and hybrids, providing a buffer against volatility in pure EV demand [5][6] - Financially, legacy automakers offer lower valuations and generally lower volatility compared to Tesla, positioning them better to handle the anticipated softening of the EV market post-subsidy [6] ETFs to Consider - **Invesco S&P 500 Pure Value ETF (RPV)**: This fund focuses on value characteristics and includes General Motors (2.94%) and Ford Motor (2.88%) among its top holdings, with an 18.6% increase over the past six months [8] - **iShares U.S. Manufacturing ETF (MADE)**: This fund provides exposure to U.S. manufacturing companies, including General Motors (3.84%) and Ford Motor (3.15%), with a 41% increase in the past six months [9][10] - **Pacer US Cash Cows 100 ETF (COWZ)**: This fund targets companies with high free cash flow yields, featuring Ford (2.05%) among its top holdings, and has seen a 17.4% increase in the past six months [11]

Summary of Ford's Third Quarter Sales Performance Core Insights - Ford experienced a strong third quarter with total sales increasing by 8.2%, aligning with analyst expectations [1] - The breakdown of sales shows internal combustion engine (ICE) vehicles up by 6.3%, hybrids up by 14.7%, and electric vehicles (EVs) up by 30.2% [1][2] Sales Breakdown - Internal combustion engine vehicles saw a growth of 6.3% [1] - Hybrid vehicle sales surged by 14.7%, indicating strong consumer demand [1][2] - Electric vehicle sales increased significantly by 30.2%, although a slowdown in EV sales is anticipated across the industry [1][2] Market Trends - Hybrids currently represent about 14% of the automotive market, with expectations to exceed 20% in the coming years [3][4] - Automakers, including Toyota, are pivoting towards hybrid models, as seen with the RAV 4 being offered only as a hybrid or plug-in hybrid [4][5] - The consumer preference for hybrids is expected to drive more manufacturers to adapt their offerings accordingly [5]

Core Viewpoint - The article discusses the European Union's plan to mandate that car rental companies and large fleets only purchase electric vehicles starting in 2030, which has faced strong criticism from German Chancellor Friedrich Merz for being unrealistic and ignoring current market needs [4][10][15]. Group 1: EU Plan Overview - The EU is drafting a proposal to require car rental companies and large fleets to exclusively purchase electric vehicles by 2030, effectively aiming for a 100% electric rental car market [10][12]. - This initiative is seen as a "green accelerator" to promote electric vehicle adoption across Europe [6][11]. - The plan is still in the internal drafting phase and has not yet been formally proposed or approved [13][14]. Group 2: German Response - Chancellor Merz criticized the proposal for overlooking current market demands and infrastructure capabilities, advocating for a more flexible approach that includes various technologies beyond just electric vehicles [15][19]. - He emphasized the need for a diverse technological landscape, including synthetic fuels and hydrogen energy, to support the automotive industry's future [20][19]. - Merz's comments reflect a broader concern that a forced transition to electric vehicles could harm the competitiveness of the European automotive industry and lead to job risks [20][19]. Group 3: Industry Reactions - The rental car industry has expressed concerns that the focus should be on improving charging infrastructure rather than solely on vehicle type [25][24]. - Leaseurope's Richard Knubben stated that advancing the ban on combustion vehicles from 2035 to 2030 does not align with economic realities and should be based on factual assessments rather than environmental beliefs [26]. - Some industry supporters argue that targeting corporate fleets, which account for 60% of new car sales in the EU, could accelerate the transition to electric vehicles and enhance the second-hand market [29][31]. Group 4: Market Implications - If the 2030 mandate is implemented, the average two-year turnover of rental vehicles would lead to a fully electric rental market by 2032, three years earlier than the previously planned ban on combustion vehicles [32]. - The controversy highlights a deeper conflict in Europe's electrification process, balancing aggressive green goals with practical market conditions [33][34].

Investment Rating - The report suggests a preference for suppliers over OEMs due to current market conditions and valuation metrics [1][3]. Core Insights - The automotive industry is facing significant challenges from tariffs, with an estimated industry cost of approximately $59 billion, which is about 8.2% of the US Average Transaction Price (ATP) [3]. - Automakers are poorly positioned to absorb tariff costs, leading to greater operating deleverage compared to suppliers [3]. - Recent legislation threatens around 52% of Tesla's earnings before interest and taxes (EBIT), which could lead to substantial negative estimate revisions for the company [1][3]. - The rise of Chinese automakers and the ongoing price wars in the electric vehicle (EV) market are contributing to a shift in preference towards suppliers [1][3]. Summary by Sections Macro Update - The report highlights that the automotive sector is experiencing a base case scenario of a 4.1% increase in new vehicle prices and a 4.1% decrease in the US light vehicle seasonally adjusted annual rate (SAAR) [3]. - Suppliers are better positioned than OEMs, benefiting from an executive order that alleviates some tariff impacts [3]. Legislative Impact - The elimination of the $7,500 federal consumer tax credit (CTC) by the end of 2025 could represent about 19% of Tesla's 2024 EBIT, while the outlawing of the California Air Resources Board (CARB) Zero Emission Vehicle (ZEV) credit trading scheme could account for approximately 33% of Tesla's 2024 EBIT [1][3]. Competitive Landscape - The report notes that the proliferation of battery electric vehicle (BEV) models and advancements in automation are making Tesla's market position less unique, as competitors like Xiaomi and BYD continue to gain market share [1][3].