Key Takeaways GM is transitioning Orion Assembly from EV production back to internal combustion vehicles.GM's reassessment includes selling a joint venture battery cell plant and recording a $1.6B charge.GM is halting BrightDrop production at CAMI Assembly and expects further charges in Q4.General Motors Company’s (GM) product portfolio and manufacturing strategy have been shaped by steadily tightening fuel economy and emissions standards over the past several years. In anticipation of a rapid shift toward ...

Group 1 - The performance of legacy auto companies in Q3 2025 may have surprised some investors [1] - There has been a steep decline in EV adoption, while sales of internal combustion engine and hybrid vehicles remain steady [1]

Sales Performance - Ford's total sales in November decreased by 0.9%, indicating a slight decline in overall performance [1] - Hyundai's US sales also fell by 2% in November, reflecting a broader trend in the automotive market [2] Electric Vehicle (EV) Trends - Ford experienced a significant drop in EV sales, down 60.8% in November, attributed to the expiration of the federal tax credit [1] - In contrast, hybrid vehicle sales increased by 13.6%, while internal combustion engine vehicles saw a modest rise of 2.2% [1] Market Conditions - November is typically a slower month for auto sales, with December expected to be busier for automakers [3] - The industry is facing challenges related to affordability, as new car payments exceed $750, impacting consumer purchasing decisions [3]

Core Insights - Tariffs have significantly impacted the U.S. automotive industry, particularly affecting Japanese automakers with a 27.5% duty on exports to the U.S. [1] - Japanese car companies accounted for nearly 20% of U.S. consumer spending on auto imports, with Mexico being the only country with a higher percentage [3] - Toyota has reported a strong performance in the U.S. market, with a 3.7% year-over-year increase in vehicle sales [4] Group 1: Japanese Automakers' Impact - Japanese automakers produced 3.28 million vehicles in the U.S. last year, employing nearly 75,000 manufacturing workers [4] - Japan renegotiated its tariff rate to 15%, effective retroactively from September 16 [4] - Toyota's sales in the U.S. reached over 2.3 million vehicles in 2024, marking a significant increase [4] Group 2: Toyota's Performance - In the first quarter of FY 2026, Toyota sold 800,000 vehicles in North America, making it the company's most important region [5] - Toyota's U.S. production increased by 26% in October, contributing to a fifth consecutive month of increased output [9] - Global output for Toyota rose 4% year-over-year to 926,987 cars, with a 2% increase in worldwide sales [8] Group 3: Sales and Market Trends - Toyota's sales in the U.S. for October reached 207,910 vehicles, continuing a trend of double-digit sales increases [9] - For the third quarter, Toyota North America reported a 16% increase in sales, totaling 629,137 vehicles [10] - Hybrids accounted for 42% of Toyota's global sales through the first 10 months of the year [10]

Core Viewpoint - General Motors has demonstrated resilience in its operations despite challenges from tariffs, raising its guidance for the fourth quarter while managing to maintain a strong vehicle portfolio and market share [2][4][16]. Financial Performance - The company reported better-than-expected results on both revenue and earnings, although profits were lower than the same quarter last year due to tariff impacts [2][4]. - Tariff costs are estimated to be between $3.5 billion and $4.5 billion for the full year, which is a reduction from previous expectations [5][6]. Tariff Impact and Mitigation - Recent announcements from the Trump administration regarding tariff offsets are expected to help maintain competitiveness in U.S. manufacturing, with a 3.75% MSRP offset remaining in place [6][7]. - The company is focused on overcoming tariff challenges and aims to return to an 8% to 10% market margin in North America [7]. Electric Vehicle (EV) Strategy - General Motors took a $1.6 billion impairment charge related to its EV business, indicating that while 40% of EVs were variable profit positive, they did not achieve EBIT profitability in the third quarter [8][10]. - The company is reevaluating its EV capacity in light of lower demand forecasts, particularly with the cessation of the $7,500 tax credit, which has led to a restructuring charge [9][14]. Production and Market Share - The internal combustion engine (ICE) vehicle segment is performing well, with over 17% market share, the highest for a third quarter in recent years [16]. - The company plans to invest $4 billion in capital over the next few years to expand production capacity in the U.S. while maintaining capital discipline [17][18].

Company Overview - Ferrari's shares are under significant pressure following its capital markets day presentation, where it raised long-term financial targets but still fell short of consensus estimates [1][4] - The company has reduced its sales guidance for electric vehicles, leading to a drop in shares to six-month lows [1][4] Financial Performance - Last year, Ferrari sold approximately 13,700 units, indicating a very small sales volume for a luxury brand [4] - The company previously guided for around 7% sales growth for fiscal year 2025, but now projects a longer-term topline sales growth of about 5% [6][7] - The expected delivery date for an all-electric vehicle has been pushed back to late 2026, and the forecast for electric vehicles as a percentage of total production by 2030 has been cut from 40% to 20% [7] Market Reaction - The market is reevaluating Ferrari's valuation due to the widening range of EBITDA growth estimates, which are projected between 30% and 40% [9][10] - The stock is perceived as expensive, and any conservative outlook from the company is being negatively received by investors [11][16] Industry Context - Other luxury brands, such as Aston Martin, are also scaling back their electric vehicle plans, reflecting broader market demand challenges [12] - The transition to an electric vehicle model poses challenges for legacy luxury brands like Ferrari, which must maintain premium pricing while managing capital expenditures and R&D costs [14][15]

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].