Goldman Sachs Group, Inc. outlook on Q4 financial reports of the US automotive industry: mixed performance, supporting General Motors Company (GM.US) while being pessimistic about Tesla, Inc. (TSLA.US)

Goldman Sachs Group, Inc. recently released its fourth quarter financial outlook report for the US automotive and industrial technology industry in 2024. Goldman Sachs Group, Inc. expects the performance of this quarter to be mixed, with some industrial technology companies showing stable performance/guidance, while the performance guidance for several automotive supply chain companies will be weaker. Goldman Sachs Group, Inc. is optimistic about General Motors Company (GM.US), Belden Inc. (BDC.US), and Lantronix, Inc. (FLEX.US), while Magna International Inc. (MGA.US) has a significant amount of business in the European automotive market, which is weaker in terms of trends in that region. Given the strong demand for data centers, improved industrial activity in the US, and potential demand-driving factors such as onshore and large projects, Goldman Sachs Group, Inc. expects companies in the industrial technology sector to announce strong financial reports and guidance. Companies like Vertiv Holdings (VRT.US), Lantronix, Inc., Keysight Technologies (KEYS.US), and Belden Inc. are expected to benefit the most from the trends in the end markets of data centers/industrial sectors. Goldman Sachs Group, Inc. expects the performance of original equipment manufacturers in the automotive sector to be mixed. US automotive sales performed well in the fourth quarter, and Goldman Sachs Group, Inc. believes that the US automotive market will experience moderate growth in 2025, partly due to price decreases. However, international markets are more challenging, with Goldman Sachs Group, Inc. European automotive team forecasting a decrease in European automotive production in 2025. Goldman Sachs Group, Inc. expects that the performance guidance for most automotive Tier 1 suppliers in 2025 will meet or be below market expectations, with Magna being the company with the largest European business among the Tier 1 suppliers covered by the firm. Goldman Sachs Group, Inc. rates General Motors Company as "buy" with a target price of $72; Ford Motor Company (F.US) is rated as "buy" with a target price of $11. Goldman Sachs Group, Inc. expects General Motors Company to have better-than-expected performance and earnings before interest and taxes (EBIT) in the fourth quarter of 2024 and 2025, benefiting from strong US sales data and stable pricing costs. In contrast, weakening international market trends have negatively impacted Ford Motor Company. Goldman Sachs Group, Inc. rates Tesla, Inc. (TSLA.US) as "neutral" with a target price of $345, a 16% decrease from the current level. Goldman Sachs Group, Inc. believes that after the results for 2024 are announced, Wall Street's expectations for Tesla, Inc. will be lowered. They expect Tesla, Inc.'s non-GAAP auto gross profit margin in the fourth quarter to be 15.0%, lower than the 17.1% in the third quarter, and their forecast for Tesla, Inc.'s earnings per share is slightly below Wall Street's. They also believe that the introduction of new car models will result in a 12% growth in Tesla, Inc.'s car deliveries in 2025, lower than Tesla, Inc.'s target of 20-30% growth and below Wall Street's expectations of 14%. Progress in artificial intelligence-related areas at Tesla, Inc., particularly in autonomous driving, Siasun Robot & Automation taxis, and humanoid Siasun Robot & Automation Transformer, may be the focus of this financial report. It is worth noting that in a previously released outlook report for 2025, Goldman Sachs Group, Inc. lowered its forecast for the US electric vehicle market to reflect lower purchase tax offsets and relaxed emission requirements. They expect electric vehicles to account for 8.5% of new car sales in the US in 2025, 25% in 2030, 40% in 2035, and 60% in 2040, lower than the previous forecast of 9%/40%/60%/75%. However, driven by initiatives in Europe and China, Goldman Sachs Group, Inc. still expects double-digit growth in global electric vehicle sales in 2025. Goldman Sachs Group, Inc. sees the complex impact of tariffs. In some cases, tariffs on imports from Mexico and/or Canada are generally unfavorable for US automotive companies and traditional North American automotive OEMs, but tariffs on imported foreign cars will restrict competition/supply. Additionally, tariffs on cars imported from Mexico/Canada may decrease. Goldman Sachs Group, Inc. expects suppliers to seek to pass on higher costs, and widespread tariffs will have a gradual negative impact.