What happened
Ford Motor (F 0.90%) stock slipped early Tuesday, dropping 2.1% at its lowest point in trade during the day through 1:30 p.m. ET.
Ford's August sales numbers confirmed the company's exponential growth in electric vehicles (EV), yet again. One analyst, however, sees a lot more in Ford's archrivals as the EV industry explodes globally, driven partly by the Inflation Reduction Act (IRA) in the U.S.
So what
Until this morning, analyst Rod Lache from Wolfe Research projected EV penetration to hit 10% in the U.S. and 17.5% globally by 2025. Lache now sees EVs penetrating 20% of the U.S. passenger car sales market and 22% of the global market by 2025, thanks to the IRA.
The Inflation Reduction Act, which was signed into law by President Joe Biden in August, proposes significant tax credits for EVs, subject to certain manufacturing, assembling, and battery sourcing conditions that are targeted at boosting the domestic EV industry.
Lache calls the IRA "the most consequential development" for the U.S. automotive industry, according to TheFly.com, and believes investors in auto stocks still haven't "fully appreciated" how significant the law is to the EV industry. The analyst sees Tesla (TSLA +0.96%) and General Motors (GM 0.46%) as the major beneficiaries under the Act and upgraded his price targets for both auto stocks, sending their prices higher today.
Lache, however, didn't mention Ford anywhere, despite the auto giant firing on all cylinders right now and projecting huge growth through 2026.
NYSE: F
Key Data Points
In August, for instance, Ford's EV sales jumped 307% year over year, with the F-150 Lightning pickup truck clocking its best month ever. Sales of the Mustang Mach-E shot up by 115% year over year, as well.
Overall, Ford handily outran the auto industry in August, growing its total sales by 27.3% when the industry grew by only about 4.8%.
Now what
While there's no denying that Tesla remains the indisputable EV leader and General Motors is pumping huge money into EVs, it's hard to see why Wolfe Research doesn't see Ford winning under the IRA. In fact, Ford's F-series, Mustang Mach-E, as well as its plug-in hybrid EV Escape, all already qualify for tax credits under the IRA, as announced by the U.S. Department of Energy. Tesla's top-selling models and General Motors' GMC Hummer pickup and SUV won't qualify for the tax credit until next year when the manufacturing sales cap is lifted.
Given the backdrop and the kind of investment Ford is making into EVs, I still see it as a huge wealth-building winner stock in the making, regardless of what Wolfe Research thinks.
