Ford, Toyota, Honda will offer maps to electric-vehicle future

Electric-vehicle competition has intensified since summer, as Elon Musk knows and earnings this week should confirm. Disney earnings will provide ammo in its proxy fight.

Feb 4, 2024 - 08:30

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Ford, Toyota, Honda will offer maps to electric-vehicle future

If it's not artificial intelligence on investors' minds, it may be this: What about electric vehicles?

The initial euphoria as EV companies launched and have worked to establish the beachhead against Tesla has waned as it's taken more of a struggle to turn dreams into reality.

Investors this week will get more data from automakers, EV companies and otherwise, that should offer a clearer picture of the state of the art now and coming up.

Another big week of earnings ahead

The week features reports from three Dow companies, McDonalds (MCD) - Get Free Report, Caterpillar (CAT) - Get Free Report and Walt Disney (DIS) - Get Free Report.

It also includes reports from restaurant giant Chipotle Mexican Grill (CMG) - Get Free Report, a host of drug companies like Eli Lilly LLY, and smattering of energy companies, including BP (BPAQF) - Get Free Report and ConocoPhillips (COP) - Get Free Report.

Disney, which reports Wednesday after the market close, is now in a bitter proxy fight with activist investor Nelson Peltz's Trian Partners. Peltz insists the company, led by Bob Iger, is spending too much money and getting little in return from a portfolio of struggling assets like ESPN.

Disney shares are up 7.6% this year after a stagnant 2023. (The shares did participate in the year-end rally.) The stock, however, is off more than 50% after peaking at $201 in early 2021.

Rate cuts are coming, Jerry Powell insists

In the background, of course: Investors are awaiting the first interest-rate cut that Federal Reserve Chairman Jerome Powell said will be coming. But there were two issues that couldn't be resolved when Powell offered his assurance rates will move lower.

When the first rate cut will come. About all we know it won't be in March.
How big it will be.

At his news conference after last week's Fed meeting, Powell did say the U.S. economy is in good shape, an idea mostly reinforced with a bullish jobs report on Friday.

Skeptics wondered, though, if increasing corporate layoffs a stagnant real estate market and other signs of stagnation belie Powell's optimistic view.

His view was cheery enough that stocks totally recovered from the slump that the Fed boss himself caused Wednesday afternoon.

The S&P 500, the Dow and the Nasdaq-100 Index set new all-time highs. Led by -- what else -- tech stocks, especially Meta Platforms META, with its 20.3% gain after reporting record earnings, revenue and the start of a dividend.

Interest rates also fell, with the 10-year Treasury yield, which guides on mortgage rates, was just above 4%.

The big question on stocks is if the momentum can continue.

Automakers ramp up earnings

Elon Musk insists that Tesla is an artificial-intelligence and robotics company.

A couple gets to set up camp thanks to their Rivian
Rivian

The problem he has learned this past week is investors apparently view Tesla as a car company. And a wide-open market to Tesla is increasingly competitive.

This week's reports come from Toyota (TM) - Get Free Report and Ford Motor (F) - Get Free Report on Tuesday and Honda (HMC) - Get Free Report on Friday.

More on electric vehicles and climate change

In between is ride-sharing company Uber Technologies (UBER) - Get Free Report, which relies an the web, telephony and, increasingly, AI, to expand its business.

The auto earnings reports will appear this week and the next two.

They've had to deal with higher costs (thanks to a UAW strike this past summer), supply-chain issues of just getting parts, and frustration that prices and operating costs are problematic to would-be new buyers.

In short, the question is if the EV market followed the classic pattern of many companies starting up and struggling to stay alive.

Toyota is in a position to be snarky. Its US shares are up 10.5% this year to Tesla's 24.4% decline.

Toyota Chairman Akio Toyoda has been skeptical EVs will be adopted as fast as Musk and others insist. Maybe in developed countries, he concedes, but not in countries with the charging infrastructure is not in place, he said recently.

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