Market Rewarding Switch to EVs

March 19, 2021

Wall Street Journal:

BERLIN—Investors are piling into a long-neglected sector: old-school car makers that are reinventing themselves as electric-vehicle producers.

After years lamenting that their shares were undervalued, Ford Motor Co. F +1.77% , General Motors Co., Volkswagen AGVOW +5.18% and other blue-chip car manufacturers are seeing sharp share-price gains this year as they embrace the new technology.

Ford is up 49% so far this year, while GM’s shares have surged 48%. VW’s stock is up 55% and even briefly rose 29% in intraday trading one day this week when the company held a “Power Day” event, saying it would build six EV battery factories in Europe alone over the next 10 years. VW has this week also eked ahead of SAP SE to become the most valuable stock on the German DAX index.

By comparison, the S&P 500 index is up just 7.4% so far this year.

The new infatuation with established auto makers, many of which have been in business for more than a century, follows an earlier rush into electric-vehicle stocks that has driven shares of Tesla Inc.and other electric vehicle and battery manufacturers into territory that some analysts say is reminiscent of the dot-com bubble of the 1990s.

Conventional auto makers have long stewed in the shadow of Tesla, whose market capitalization remains twice that of VW, GM and Ford combined. But as the incumbents deepen their commitment to electric cars, they are beginning to persuade investors that they are serious about turning away from fossil fuels and embracing green technology.

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