Jefferies downgrades Ford (F.US) rating to underperform the market, General Motors Company (GM.US) stable strategy is favored.

After the Biden administration revoked the electric vehicle mandate and emissions restrictions, Ford Motor Company (F.US) was supposed to benefit along with other American internal combustion engine vehicle manufacturers. However, the automotive analyst team at Jefferies downgraded Ford's rating from "hold" to "underperform the market", and significantly reduced its target price by 25% to $9, indicating a possible 13% decline in stock price. Behind this rating adjustment are a series of localized challenges Ford faces, rather than systemic ones, including inventory build-up, strategic adjustments or exits in the European business, and a widening gap between warranty reserves and cash flow. It is understood that Ford is facing a particularly difficult start in 2025, with an accumulated gap of up to $8.5 billion between warranty/quality reserves and cash outflow, while the company is also advancing an undisclosed electrification strategy that may focus on range extender technology. Jefferies believes that this strategy may be centered around range extender technology, which will be key to the company's future technological development. Although Ford's balance sheet is considered "robust rather than strong", if the company wishes to maintain a conservative financial position, restructuring and warranty claims may deplete the remaining cash available to shareholders. Meanwhile, the Jefferies team maintained a "hold" rating on General Motors Company (GM.US), believing that its solid capital allocation policy and continued cost-cutting measures position General Motors Company favorably when market trading conditions improve. Although General Motors Company may face pressure from changes in electric vehicle policies in 2025, which could disrupt its efforts to expand production for profitability, and Stellantis (STLA.US) is also seeking to take market share from General Motors Company, Houchois and his team remain optimistic about General Motors Company's future profitability and stock buyback potential.