Shares of Ford Motor Company (NYSE:F) were moving lower on Wednesday, following a new note from Goldman Sachs that expressed concerns about near-term cash burn and Ford's longer-term strategy around electric vehicles.
As of 11 a.m. EDT, Ford's shares were down about 5.2% from Tuesday's closing price.
In a broad research note on the U.S. auto industry, Goldman analyst Mark Delaney initiated coverage of Ford at neutral. He said that in the near term, he expects automakers like Ford to underperform auto-industry suppliers, as is typical (he argues) during an economic downturn. He thinks both Ford and rival General Motors (NYSE:GM) will burn significant amounts of cash in the first half of the year before recovering later on.
More broadly, Delaney thinks battery-electric vehicles will be the key to growth for automakers over the longer term. He views the overall decline in U.S. auto stocks as an opportunity to buy companies that are most heavily exposed to electric vehicles, and he thinks Ford might not be the favorite in that group.
Delaney thinks Ford's electrification strategy, which involves a mix of hybrids and fully electric vehicles, puts it at a disadvantage to rival automakers who are all-in on fully electric architectures.
(Readers will not be surprised to learn that Delaney is very bullish on Tesla (NASDAQ:TSLA). He rated Tesla a buy, with a Wall Street-high target price of $864.)
There are reasons for auto investors to be skeptical of Delaney's analysis. (For starters, electric-vehicle adoption rates weren't exactly surging before the coronavirus outbreak, and there's no reason to think that has changed.)
But his view that Ford has the cash to get through the current crisis is probably sound. (Whether Tesla does is a question for another day.)
We'll learn much more about how Ford is faring when it reports its first-quarter earnings result on April 28.