Auto Stock Roundup: Tesla Receives Nod To Sell Model 3 In Europe, Ford Lags Q4 Earnings
Zacks Investment Research | Jan 23, 2019 10:41PM ET
Tesla, Inc. (NASDAQ:TSLA) received positive signal from the European territory this week to sell its flagship Model 3. It is indeed a big development for this electric vehicle pioneer as it believes that the size of the European premium sedan market is more than double of the one in the United States. This European launch has not only opened up a huge opportunity for this carmaker but is also likely to help it compete with automakers in Germany for the premium car market.
Ford Motor Company (NYSE:F) posted fourth-quarter and 2018 results. It reported adjusted earnings per share of 30 cents for fourth-quarter 2018, missing the Zacks Consensus Estimate of 31 cents. In the prior-year quarter, adjusted earnings were 39 cents per share. Results were impacted by challenges faced by the company in China and Europe.
In another development, Japanese auto major Toyota Motor Company (NYSE:TM) announced that it will produce batteries for electric vehicles (EVs) in a joint venture (JV) with Panasonic Corporation. The JV is expected to start operating from 2020, with Toyota holding 51% stake while Panasonic will hold the rest.
Recap of the Week’s Most Important Stories
1. General Motors Company (NYSE:GM) cautioned employees in Brazil about losses and informed that this situation requires a tough turnaround plan, per Reuters. The company is encountering challenges in South America, which makes it imprudent to deploy capital at this moment. However, if this leads to shutdown or halt in production in the continent, it will have serious consequences on the company’s employees.
In South America, conditions in Brazil are improving since the 2015-16 recession. However, Argentina struggled due to inflation and declining peso owing to a recession in 2018. Meanwhile, investors are keeping an eye on how economic reforms will change things in these key South American countries.
Notably, the government of Brazil extended subsidy to the auto industry, which has for long struggled to keep up with production in other regions. In sync with this, a 15-year tax break package was offered to automakers in 2018. However, per experts, Brazil cannot continue to offer subsidies to the key industries as it believes that the abolishment of protectionist policies will lead to more competitiveness. However, given the losses in South America, General Motors needs to devise a tough turnaround plan. (Read more: Zacks Investment Research
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