Shares of legacy automakers General Motor Co GM and Ford Motor Co F have fetched stunning returns in the first six months this year that their pure electric vehicle rivals Tesla Inc TSLA and Nio Inc NIO can't match.
What Happened: With a much smaller market cap than Tesla’s, GM and Ford shares gave returns of 42% and 69%, respectively, in the first half of 2021. In comparison, Tesla shares slipped about 4% during the same period.
Nio, the U.S.-listed Chinese electric vehicle that is yet to begin selling cars in North America, fetched a 9.15% jump in shares year-to-date.
Both Ford and GM have recently updated plans to pour billions of additional dollars into shaping up their switch to a completely electric vehicle portfolio from the current internal combustion engine.
Besides that, the likes of GM and Ford in the U.S. have been struggling with low inventory since the beginning of the year, which is now down to a new low in nearly twelve years, as per industry watchers.
Struggling with low inventory due to the semiconductor chip shortages, Ford and GM have rushed to build their most profitable pickups and trucks first — leading to fewer cars at dealerships but record higher transaction prices for customers.
Ford reported a strong first-quarter profit of $3.3 billion, its best in over a decade. GM reported $4.4 billion in operating profit for the first quarter and earlier this month said it expects first-half profits to be significantly better than the previous forecast of $5.5 billion.
Why It Matters: Elon Musk-led Tesla during much of this time remained mired in controversies and media spotlight in China, a key market for growth outside of the United States.
The biggest fall for the stock came in early March when Tesla fell below $600 for the first time since December last year amid a tech-driven sell-off. Tesla bulls too have this year acknowledged rising competition even as critics have pointed out apprehensions regarding the company's full self-driving capabilities.
Price Action: GM shares closed 0.60% higher at $59.17 on Thursday, Ford closed 1.03% lower at $14.86, Tesla 0.16% lower at $679.70 and Nio jumped 5.66% higher at $53.20.
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