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GM And Ford Try To Persuade Investors There Won't Be A Price War With Tesla

GM And Ford Try To Persuade Investors There Won't Be A Price War With Tesla
When they report first-quarter profits this week, Detroit automakers General Motors Co. and Ford Motor Co. will aim to reassure Wall Street that they won't get caught up in a price war with Tesla Inc.
Investors are still unconvinced as of now. GM stock is selling near its 2010 IPO price of $33 per share, down more than 20% from its February 2023 top. As Tesla CEO Elon Musk intensified a strategy of reducing his company's profit margins to increase sales volume, Ford shares have fallen 13% since February.
On Wednesday, GM releases its first-quarter earnings. With its "Off to a Great Start" first quarter U.S. sales report released this month, the automaker gave a positive prognosis. Sales of high-margin trucks and SUVs drove GM's first-quarter U.S. sales increase of 18% over the same period last year.
GM CEO Mary Barra is stepping up efforts to reduce operating expenses by $2 billion by year's end. This month, GM's chief financial officer, Paul Jacobson, informed investors that 5,000 employees had agreed to severance packages.
Only 968 Cadillac Lyriq EVs were delivered in the first quarter, indicating that GM has been hesitant to ramp up manufacturing of its newest EVs.
According to a note published on Monday by J.P. Morgan analyst Ryan Brinkman, that might assist the business short-term avoid the effects of Tesla's price reductions.
"GM and Ford should see drastically better trends in pricing and resulting margin impacts than did Tesla" in the first quarter, Brinkman wrote. However, he added, investors are concerned that "weakness in EV pricing could spread beyond Tesla to other automakers’ electric vehicles and — much more importantly — into the broader market for new vehicles generally."
Ford, which releases first-quarter financial results on May 2, also announced robust truck sales in the U.S., with F-150 pickup vehicle deliveries increasing 21% from levels a year earlier despite chip shortages.
Ford's new financial reporting methodology, which reflects its broader restructure, will make its debut in the first quarter report.
Results for the Model e electric car business, Ford Blue combustion vehicle operations, and Ford Pro commercial vehicle segment will all be reported by the corporation. Ford hinted that its EV segment would lose $3 billion before taxes this year in a briefing last month.

Christopher J. Mitchell

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