empty
22.11.2021 12:21 PM
How can Ford and GM close the gap with Rivian?

This image is no longer relevant

Automakers of the old school should be envious of the inflated estimates of startups in the field of electric vehicles. At one point during the previous week, Rivian Automotive was worth the same as Ford Motor and General Motors combined.

Perhaps, there is a way for traditional automakers to overcome this valuation gap. In order to address such a problem, Barron Michael Berry of Scion Asset Management said that Ford and GM need to create inventory tracking for their next-generation vehicles, such as electric cars, robo-taxis, etc.

This will make it possible to track the financial performance of a particular business unit. The shareholders of the tracked shares have a financial interest only in the tracked division, and not in the entire business.

Let's put it this way: It costs several billion dollars to build a new electric vehicle manufacturing plant that could produce, for example, 500,000 electric vehicles a year together with batteries to power them. This is less than 1% of the market capitalization of Tesla (TESLA), but about 5% to 10% of the capitalization of Ford or GM.

Car manufacturers are too complex: many manufacturing plants perform several jobs for other factories in the network.

Nevertheless, inventory tracking is quite possible. For example, Liberty Media Formula One (FAN) tracks the financial performance of the Formula One racing series. Back in 1984, General Motors conducted the first inventory tracking for Electronic Data Systems, or EDS, Ross Perot.

How to estimate Ford or GM tracking stocks? The possibilities are tempting.

Like Rivian, Ford is launching an electric vehicle truck and is already selling the Mustang Mach E electric vehicle. If the company achieves its goals, Ford's electric vehicle business should be about four times larger than Rivian's by 2023.

This image is no longer relevant

GM is essentially the second largest electric vehicle manufacturer in the United States, after Tesla. The global volume of GM electric vehicles is about 300,000 units, taking into account the sales of GM joint ventures in China. Given that Lucid costs almost the same as GM and plans to sell approximately 20,000 units in 2022, the cost of GM's electric vehicle company could be several times higher than Lucid's.

This image is no longer relevant

If all electric car companies and electric car tracking stocks were valued like some electric car stocks, the auto industry's valuation could easily exceed $4 trillion.

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Trump's Tax Plan to Increase U.S. Deficit by Nearly $3.3 Trillion

According to a new assessment by the nonpartisan Congressional Budget Office, the Senate's latest version of President Donald Trump's tax and spending package would increase the U.S. deficit by nearly

Jakub Novak 12:35 2025-06-30 UTC+2

Are There Still Chances for Trade Deals?

The euro, the pound, and other risk-sensitive assets continue to rise against the weakening U.S. dollar, although the possibility of a rebound in the dollar—as well as the conclusion

Jakub Novak 12:31 2025-06-30 UTC+2

Bitcoin outshines competitors

Expectations vs. reality Cryptocurrency creators once envisioned a universe where countless tokens could compete for investors' money. In reality, aside from Bitcoin and a handful of digital assets, the rest

Marek Petkovich 12:15 2025-06-30 UTC+2

US stock market fed up with "smart money"

The end of June brought a spectacular rally for the S&P 500. Not only did the broad stock index hit a new all-time high for the first time since February

Marek Petkovich 11:15 2025-06-30 UTC+2

Markets End the First Summer Month on a Positive Note (with a Likely Continuation of #USDX Decline and EUR/USD Growth)

The ceasefire between Iran and Israel is providing significant support for the growth in demand for risk assets, and expectations of negotiations between contact groups starting this week are further

Pati Gani 10:04 2025-06-30 UTC+2

What to Pay Attention to on June 30? A Breakdown of Fundamental Events for Beginners

There are only a few macroeconomic reports scheduled for Monday. Perhaps the most important is the final Q1 GDP report in the United Kingdom. Let us recall that the British

Paolo Greco 06:02 2025-06-30 UTC+2

GBP/USD Overview – June 30: Nonfarm Payrolls, Powell, and Unemployment

The GBP/USD currency pair rose by 300 pips over the past week and appears to be in no hurry to stop. Even on Friday, the price failed to initiate

Paolo Greco 03:37 2025-06-30 UTC+2

EUR/USD Overview – June 30: European Inflation and Another Round of Lagarde Speeches

The EUR/USD currency pair has been rising for five consecutive months. During this time, we've only seen a few minor downward corrections, each ending in another collapse of the U.S

Paolo Greco 03:37 2025-06-30 UTC+2

U.S. Dollar – Weekly Preview

The American news background will once again play a key role for the dollar and, therefore, for the market and the vast majority of instruments. This past week, only

Chin Zhao 00:34 2025-06-30 UTC+2

British Pound – Weekly Preview

The situation for the British pound in the market and news landscape is quite similar. For the pound, two rate cuts by the Bank of England in 2025 or zero

Chin Zhao 00:34 2025-06-30 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.