Claim: ‘Gasoline is becoming worthless’ – Gas-powered cars ‘destined to become money-losers as early as 2030’
By Rick Newman· Senior Columnist Yahoo Finance
You still have to pay a couple bucks for a gallon of gas (more in California, as always), but automakers are discovering that gas-powered cars may be a liability that detracts from their valuations, instead of an asset that enhances values.
New research from Morgan Stanley argues that traditional internal combustion engines—the mainstay of automobiles for more than a century—are destined to become money-losers as early as 2030. “We believe the market may be ascribing zero (or even negative?) value for ICE-derived revenues at GM and Ford,” auto analyst Adam Jonas wrote in a Jan. 29 analysis. He lists a variety of factors likely to “transform what were once profit-generating assets into potentially loss-making and cash-burning businesses.”
In late January, General Motors (GM) said it plans to stop selling vehicles with tailpipe emissions by 2035. That means GM won’t sell any gas- or diesel-powered vehicles, the types of cars that now account for nearly all GM sales and profit. That would require an all-electric fleet, powered off the electrical grid, as with most current electrics, or perhaps through on-board fuel cells powered by hydrogen. While most automakers are developing electric vehicles, GM is the first big one to commit to a full transition.
Ford (F) hasn’t gone as far as GM, but it, too, plans an aggressive rollout of EVs to complement and replace current models. Most other automakers are doing the same. Dozens of EVs will flood the market in coming years, including a Ford F-150 pickup, the Ford Mustang Mach-E, the GMC Hummer and the Cadillac Lyriq.
Shares of GM and Ford have surged recently, as investors seem to believe each old-line automaker is progressing toward EVs in earnest. GM shares are up 51% during the last three months, with Ford up 41%. Neither can touch Tesla (TSLA), up 126% during the last three months and a stunning 575% during the last year. But investors are now giving Detroit’s Big Two more credit for electrification plans they’ve been skeptical about, until recently.