Why The Biden Administration Could Be Very Bullish For Ford, GM

The incoming Joe Biden administration has made clear that clean energy will be a central focus of its policy plans.

Legacy automakers Ford Motor Company F and General Motors Company GM aren't typically seen as champions of the clean energy revolution, but DataTrek Research co-founder Nicholas Colas said Tuesday they could be well positioned to get the lion’s share of a $40 billion investment by the Biden administration.

$40 Billion In Federal Funding: Back in 2009, the American Recovery and Reinvestment Act (ARRA) included a Department of Energy loan guarantee authority. A recent Politico article pointed out that that program still has $40 billion in funding that remains untouched to this day.

Colas pointed out that Biden’s recent nomination of former Michigan governor Jennifer Granholm for Energy Secretary could be a strong hint for investors that Biden’s clean energy push could be focused on Detroit. Granholm previously helped coordinate and oversee federal bailouts of the Michigan auto industry during the 2009 financial crisis.

“Connect these dots and they are quite positive for Ford, General Motors, and US auto suppliers (at least in theory),” Colas said.

See Also: How The Biden Administration Could Benefit EV Players In The US

Auto Loan Precedent: Back in September 2009, the government-backed a $5.9 billion loan to Ford for “advanced vehicle manufacturing projects,” a loan Colas suggests could serve as the framework for additional clean energy policy measures in 2021 and beyond.

“On top of that you have a political figure from Michigan running the Department of Energy. Whether this combination makes for an investment case remains to be seen, but it’s a decent start,” Colas said.

He said the extent to which Biden will be able to achieve his clean energy policy goals in the next two years will have a lot to do with whether or not Democrats can pull off a Senate upset in Georgia on Tuesday.

Benzinga’s Take: Upstart electric vehicle stocks have been some of the top performers in the stock market in the past year. However, both Ford and GM have announced massive investments in next-generation auto technology, and they hold huge market share leads over EV competitors.