Cramer says Ford, GM stock is gaining momentum as Tesla slips

CNBC’s Jim Cramer on Monday advocated owning shares in two traditional automakers over riskier, younger competitors as the economy expands and investors watch the electric vehicle trade.

In the current market environment where fast-growing names are losing momentum from last year’s ride, Cramer recommended holding shares in Ford and General Motors instead of Tesla and other pickups that spawned from the EV SPAC craze.

“If you want to bet on electric vehicles with much less risk, I say buy some Ford or General Motors,” said the host of Mad Money. “Despite their internal combustion engine bones, they have been given meaningful exposure and, just as importantly, they fit the present moment in a way that Tesla or the SPACs simply don’t.”

Tesla’s power over the U.S. electric vehicle market appears to be shrinking: Domestic electric vehicle sales are on the rise as more automakers put their own electric products on the road, Morgan Stanley research shows. The company found that domestic electric vehicle sales were up 34% in February from the previous year and Tesla’s market share shrank by double digits to 69% over the same period.

Ford and GM have introduced their own all-electric consumer vehicles, and Cramer believes their products will provide a competitive edge.

Ford built an electric version of its Mustang, the Mach-E, a rival to Tesla’s Model Y crossover. The company also has an electric F-150 in the pipeline that Cramer believes will be a hit with small businesses looking to buy pickup trucks as the economy grows.

GM wants to put 30 electric car models on the road by 2025. The Detroit-based manufacturer is also investing heavily in better battery technology, which could help solve a bottleneck for electric auto parts, Cramer noted.

“These are huge, established companies with improved balance sheets and real profits, profits that are skyrocketing right now,” he said.

To date, GM’s market value has increased by 39% and Ford’s by 50%. Tesla, after a 743% increase in 2020, is roughly level with the year.

As for Tesla and its many blank check offerings – battery company QuantumScape, plug-in hybrid electric vehicle manufacturer Fisker and Lucid Motors join Churchill Capital IV – Cramer says they have become battlefield stocks and difficult to own.

“The honeymoon period for the electric car SPACs is over. Even the good ones have been hit hard,” said Cramer. “The market is now much more skeptical about speculative growth stocks.”

“If you want exposure to electric vehicles, but you don’t want to risk betting on a junior growth stock, you can stick to what works,” he said at Ford and GM.

Disclosure: Cramer’s charity owns Ford stock.

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