Premarket stocks: The electric vehicle hype is still driving auto stocks

But that doesn’t bother Wall Street, which continues to focus on investing in electric vehicles that could fuel future growth.

What’s up: General Motors (GM), Chrysler owners Stellantis and Honda (HMC) All recently said that sales have plummeted in the past three months due to supply chain disruptions. The latest update from ford (F.) is due Monday.

“The persistent nature of the microchip shortages and the congestion of ports continues to limit the entire industry,” Honda CEO Dave Gardner said in a statement.

Breakdown: Automakers say demand for vehicles remains strong even after prices hit record highs. According to the Kelley Blue Book, the average new vehicle in the United States sold for $ 43,355 in August. That is 10% more than a year ago.

“The underlying demand conditions remain strong thanks to numerous job vacancies, growing pent-up vehicle demand and excess savings that many households have amassed during the pandemic,” said GM chief economist Elaine Buckberg.

But automakers have had to shut down facilities for months to secure the necessary parts, a problem they had hoped is now behind them. That puts a strain on the deliveries.

Investors are doing their best to look beyond the latest developments. GM’s shares rose nearly 8% in September while Ford climbed nearly 9%. The First Trust Nasdaq Global Auto Index Fund, which tracks the sector, pulled back for the past two months but remains nearly 12% higher this year after rising 53% in 2020.

Why? Call it trust in the future of the electric car.

Last week Ford announced it was investing $ 7 billion to build two huge electric vehicle manufacturing facilities in Kentucky and Tennessee. GM, which has scheduled a presentation to investors later this week, is also expected to cement its electric vehicle strategy (despite a recall of its Chevy Bolt to combat fire-prone battery cells).

Tesla (TSLA), the ultimate electric vehicle editorial, has also addressed supply chain issues. A slump in sales is not in sight. The automaker said Saturday that it shipped 241,300 vehicles in the most recent quarter, up more than 70% year over year.

“With chip shortages creating a huge overhang in the automotive industry and logistical problems around the world, these shipments were ‘conspicuous’,” Wedbush Securities analysts Daniel Ives and John Katsingris said in a research note. Tesla’s deliveries show “fairly robust” demand for electric vehicles through late 2021 and next year, they added.

Big picture: According to the International Energy Agency, 10 million electric cars were on the road worldwide at the end of 2020. That number could climb to nearly 145 million by 2030 if governments implement their plans to promote adoption.

Automakers are looking to lead this transition, while Wall Street is betting that it will be a godsend. However, this requires a look at the current framework, which is still extremely difficult for most companies.

Evergrande’s stock has been halted due to reports of a new deal

Evergrande’s shares were suspended on Monday amid reports that a competing Chinese real estate developer was preparing to buy its property management arm.

If such a deal works, it could give the ailing corporation access to urgently needed cash, reports my CNN business colleague Michelle Toh. It still can’t be enough.

The Latest: Cailian News, a state news agency, reports that Hopson Development plans to acquire a 51 percent stake in Evergrande’s real estate management business valued at more than $ 5 billion.

Hopson shares were also suspended in Hong Kong on Monday due to an “upcoming” announcement related to a major acquisition. The company said it would “not comment on market rumors”.

Step back: Evergrande has been searching for buyers for some of its businesses as it struggles to survive a financial crisis. The conglomerate is China’s most indebted developer with more than $ 300 billion in debt.

It has likely missed two bond payment deadlines in the past few weeks, raising concerns about an impending collapse that could reverberate around the world. Evergrande’s stock has plummeted 80% so far this year.

Note this area: The company appears to be prioritizing its domestic debt over its debt to overseas investors. There is also tremendous pressure from Beijing to protect people who have bought their homes and have not yet occupied them.

There is still expectation that the Chinese government will step in to limit the impact of Evergrande’s financial troubles. However, there is still a lack of clarity as to how this could turn out.

“The Chinese government still has very little transparency about the fate of Evergrande, although slow and steady wind-down appears to be the preferred route right now,” said Jeffrey Halley, a senior market analyst for the Asia-Pacific region at Oanda, in a note to customers on Monday.

Corporate vaccination mandates are becoming increasingly popular

Employer mandates for Covid-19 vaccines are becoming more and more common. This also applies to public acceptance, although there are still pockets of resistance.

Recent surveys by the think tank Kaiser Family Foundation and Gallup in healthcare have shown greater support for mandates compared to previous surveys, reports my CNN Business colleague Chris Isidore.

Speaking to 1,500 people in mid-September, KFF said the majority of respondents are in favor of compulsory vaccination for health care workers, teachers and federal government employees, while nearly six in ten support the Biden government’s new mandate that large employers need vaccines or order weekly tests.

Gallup, who also conducted a survey last month, found 58% of employees supported vaccine mandates, up from 52% in July and August and 49% in June.

On the Radar: Employers’ vaccination regulations appear to be effective in increasing vaccination rates. United Airlines said last week that only 593 of its employees could be laid off for failing to meet their vaccine requirements. That’s less than 1% of the 67,000 U.S. workers covered by the rule.

Other airlines, including American Airlines and JetBlue, are following suit as the US government requires vaccines for all employees of federal government contractors with no test alternative.

“While we are still working on the details of the state requirements, it is clear that team members who choose to remain unvaccinated cannot work for American Airlines,” CEO Doug Parker said in a statement to employees on Friday.


PepsiCo (PEP) reports results before US markets open.

Also today: The Organization of Petroleum Exporting Countries meets via video conference to discuss crude oil production. The ramp-up of production could dampen a recent price rally.

Tomorrow comes: The Facebook (FB) Whistleblower testifies before a Senate subcommittee at a hearing titled Protecting Kids Online.


Leave a Comment