What happened
General Motors (GM) stepped on the accelerator, and Ford Motor Company (F) is going along for the ride. Shares of Ford traded up as much as 5.3% on Tuesday after crosstown rival GM handily beat expectations.
So what
It's a busy week for Ford. On Monday, the automotive giant announced it was cutting prices on its popular Mustang Mach-E electric vehicle, part of a plan to better compete with Tesla.
On Tuesday, it was news from General Motors that was giving Ford shares a push. GM earned $2.12 per share in the fourth quarter on revenue of $43.11 billion, easily topping analyst expectations for $1.69 per share in earnings on sales of $40.6 billion.
Some of the positives GM cited can easily be applied to other automakers as well. GM said supply chain troubles that plagued the sector through most of 2022 are easing, and pricing remains strong despite concerns about mounting economic pressure on U.S. consumers.
GM is watching the economic environment closely, and announced plans to trim about $2 billion in costs over the next two years. But the overall tone of the announcement and subsequent earnings call was upbeat, and it is giving rivals including Ford a lift.
Ford is expected to release its fourth-quarter results on Thursday.
Now what
There were noticeable differences between GM and what Ford has said recently that investors should note. GM CEO Mary Barra told analysts the company is not planning on following Ford's lead and lowering prices on electric vehicles, saying on the post-earnings call, "we think right now we're priced where we need to be."
The macro economy remains a concern, and Ford could feel a pinch heading into 2023 as the price cuts take hold. But GM's earnings if nothing else make the case that conditions are a lot better than investors might have feared.
Ford now faces elevated expectations heading into its own earnings report.
