Cramer says Ford, GM shares are gaining momentum with Tesla crash

CNBC’s Jim Cramer defended on Monday the possibility of owning shares in two traditional automakers instead of younger and riskier competitors, while the economy is expanding and investors are looking to trade in electric vehicles.

In the current market environment, where high-growth names are losing the momentum of last year’s race, Cramer recommended holding shares in Ford and General Motors instead of companies like Tesla and other picks driven by the EV SPAC craze.

“If you want to bet on electric vehicles with much less risk, I say to buy some Ford or General Motors,” said the host of “Mad Money”. “Despite their bones from the internal combustion engine, they have significant exposure and, just as importantly, they fit into the present moment in a way that Tesla or SPACs just don’t.”

Tesla’s lead in the U.S. electric vehicle market appears to be shrinking: domestic sales of electric vehicles are increasing as more automakers put their own electric products on the roads, according to research by Morgan Stanley. The company found that domestic EV sales increased 34% in February compared to the previous year and that Tesla’s market share shrank double digits to 69% in the same period.

Ford and GM have launched their own all-electric consumer vehicles, and Cramer believes that their products will offer a competitive advantage.

Ford built an electric version of its Mustang, the Mach-E, a rival to Tesla’s Model Y crossover. The company also has an electric F-150 in the pipeline that Cramer believes will be a hit with small businesses looking to buy pickup trucks as the economy expands.

GM plans to put 30 models of electric vehicles on the roads by 2025. The Detroit-based manufacturer is also investing heavily in better battery technology, which could help solve a bottleneck for electric car components, noted Cramer.

“They are huge, established companies with balance sheets and real gains in improvement, profits that are skyrocketing now,” he said.

In the accumulated result for the year, GM’s market value increased 39% and Ford’s 50%. Tesla, after increasing 743% in 2020, is practically balanced for the year.

As for Tesla and the many blank check offerings – battery company QuantumScape, maker of plug-in hybrid electric vehicles Fisker and Lucid Motors tie Churchill Capital IV – Cramer says they have become battlefield stocks and difficult to own.

“The honeymoon period for electric vehicle SPACs is over. Even the good ones have been hit hard,” said Cramer. “The market is much more skeptical about speculative growth stocks now.”

“If you want exposure to electric vehicles, but you don’t want to risk betting on junior growth stocks, you can keep what’s working” at Ford and GM, he said.

Disclosure: Cramer’s charity fund has Ford shares.

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