CNBC’s Jim Cramer spoke out Monday in favor of owning shares in two traditional automakers versus riskier, younger competitors as the economy shifts into expansion mode and investors look to electric vehicle trading.
In the current market environment where high-growth names are losing momentum due to last year’s drive, Cramer recommended holding stakes in Ford and General Motors over Tesla and other picks sparked by the EV SPAC craze.
“If you want to bet on electric vehicles with much less risk, buy Ford or General Motors,” said the host of “Mad Money”. “Despite their bones in internal combustion engines, they have significant exposure and, just as importantly, they fit the current moment in a way that Tesla or the SPACs just don’t.”
Tesla’s dominance of the U.S. electric vehicle market appears to be shrinking: Domestic electric vehicle sales are rising as automakers bring their own electrical products to the streets, according to a study by Morgan Stanley. The company found that domestic EV sales in February were up 34% year over year, and Tesla’s market share fell double-digit to 69% over the same period.
Ford and GM have unveiled their own all-electric consumer vehicles, and Cramer expects their products will provide a competitive advantage.
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 pickups as the economy expands.
GM plans to have 30 electric vehicle models on the road by 2025. The Detroit-based manufacturer is also investing heavily in better battery technology that could help address a bottleneck in electric car components, Cramer said.
“These are huge, established companies with improved balance sheets and real revenues that are skyrocketing,” he said.
Since the start of the year, GM’s market value has increased 39% and Ford’s 50%. Tesla is nearly balanced after a 743% increase in 2020.
As for Tesla and the many blank check offers – battery company QuantumScape, plug-in hybrid electric vehicle maker Fisker, and Lucid Motors that tie Churchill Capital IV together – Cramer says they have become battlefield stocks and are hard to own.
“The honeymoon for EV SPACs is over. Even the good guys 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 don’t want to take the risk of betting on a junior growth stock, you can stick to what works at Ford and GM,” he said.
Disclosure: Cramer’s charitable foundation owns shares in Ford.
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