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The Zacks Analyst Blog Highlights: General Motors, Ford, Fiat, Tesla and Honda
Wed, October 7, 2020, 11:08 AM MDT

Race to EV Transition
Amid rising climate change concerns and favorable government policies, Detroit automakers are betting big on electrification efforts. While green vehicles are still years away to constitute a major chunk of overall sales, auto giants are fast changing their gears to electric.

In this regard, General Motors is leaving no stone unturned to demonstrate its EV prowess. It aims to spend more than $20 billion through 2025 to launch gen-next EVs powered by new low-cost batteries. The company is on track to roll out 20 new EVs by 2023. Key launches would include luxury Cadillac Lyric, Hummer pickup and SUV. General Motors’ collaboration with Honda, Uber, EVgo and Nikola showcase its commitment toward an electrified future. When it comes to battery technology, General Motors has a clear edge over peers as of now with the Ultium Drive System, through which it seeks to build a vertically integrated electric car business.

Balance Sheet Strength
Fiat Chrysler scores better in terms of leverage. As of Jun 30, the company had a long-term debt of 15.6 billion euros (more than $18 billion), with a long-term debt-to-capital ratio of 0.38. Meanwhile, General Motors and Ford had a long-term automotive debt of $32.2 billion and $37.4 billion, representing long-term debt-to-capital ratios of 0.53 and 0.55, respectively.

Given economic uncertainty, cash is the king for businesses. Companies are resorting to severe cost-containment initiatives to boost their liquidity profile. At second quarter-end, Ford, General Motors and Fiat Chrysler’s cash and cash equivalents were $30.9 billion, $28.2 billion and $16.4 billion, respectively. With a cash ratio of 0.62, Ford fares well in the liquidity parameter. Meanwhile, General Motors and Fiat Chrysler have a cash ratio of 0.48 and 0.42, respectively.
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