It's Never Enough For Wall Street

GM and Ford have promised tens of billions for EVs. Wall Street has taken a look and said, 'Eh.'

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Photo: Ford

General Motors, a highly profitable car company, reported profits of $2.8 billion in the second quarter on Wednesday. You might think that earning billions of dollars would delight investors, because what is the point of big business other than to earn billions of dollars. You would be wrong.

That is in part because the $2.8 billion profit was less than Wall Street had expected, but also because, according to the Financial Times, Wall Street simply expects more from GM, and Ford, too, on EVs. GM’s stock is down over eight percent Wednesday as of this writing.

“The Street wants to see an accelerated EV vision where more investments happen over the next two, three, four years rather than waiting to the end of the decade,” said Dan Ives, an analyst at Wedbush Securities. “It’s an arms race right now . . . There’s a fear that if they’re not aggressive enough over the coming years, they’ll be left in the dust by the likes of Tesla.”

The enthusiasm is new, notes Morningstar analyst David Whiston. A few years ago investors would have punished the carmakers’ stock prices had they embraced EVs, which make up just 2 per cent of the US market.

Now GM and Ford “are both investing for the future while also riding out the [internal combustion engine] as long as they can”, Whiston said. That is their advantage over Tesla: while neither Detroit company can claim a celebrity chief executive or a retail investor base to send their valuation skyrocketing, Tesla only recently began making money. GM and Ford have profits from traditional vehicles to plough into battery-powered ones.


The thing you quickly learn when you talk to any Wall Street type, any private equity type, or pretty much anyone with an MBA is that modest profits are never enough. Companies must relentlessly grow and reinvent themselves or be presumed to be failing. This is all fine and good if your only goal is to make ever-increasing amounts of money, but, as a general life posture, there is nothing cool or fun about it, always being the person in the room being like, “Still not good enough.”

These types also have no fundamental principles, as the FT notes in mentioning that, just a few years ago, if GM and Ford had said they were in on EVs, investors would’ve penalized them for it. I’m thus left to conclude that Wall Street has the attention span of a cocaine user, and should be treated as such: kept at a distance and mostly ignored.