Ford Motor Company (F)

[Randolph Duke]

rut roh Cheaper oil good for Ford and GM, but not for Tesla •

Carl Surran, SA News Editor
Consumer spending in several areas is likely to benefit from lower pump prices, but J.P. Morgan's Ryan Brinkman thinks the auto industry may benefit more than most from consumers having more money to spend on all things apart from fuel.

The analyst sees Goodyear Tire (NASDAQ:GT), American Axle (NYSE:AXL), GM and Ford (NYSE:F) - in that order - as best positioned to benefit, followed by suppliers with material exposure to full-size trucks and SUVs that is not as great as AXL, including Tenneco (NYSE:TEN), Lear (NYSE:LEA) and Tower International (NYSE:TOWR).

Tesla (NASDAQ:TSLA) is an exception, however, as Brinkman sees a potential reduction in the terminal value of cash flows on his reduced outlook for Model 3 vehicles if fuel prices remain low longer-term.

Despite the subsidies, the more cars Tesla makes, the more they lose. Not only does Tesla have ever higher negative retained earnings Tesla also has exponentially growing liabilities.

Investors need to worry about where all the money will be coming from to fund the mission. Goldman Sachs thinks Tesla needs $6B "at the low end".