Cathie Wood pours cold water on the rally in traditional automakers, calling recent surges in Ford and GM stock 'ridiculous'

Catherine Wood, chief executive officer and chief investment officer, Ark Invest, speaks at the Milken Institute Global Conference in Beverly Hills, California in October of 2021.

Patrick T. Fallon is a photographer.

The recent rally in traditional automakers Ford and General GM isn't being bought by Ark Invest's Cathie Wood.
Ford said it would double the production of its electric F-150, while General GM showed off its electric Silverado.
Wood said that the electric vehicle announcements were ridiculous.
Our daily newsletter is called 10 Things Before the Opening Bell.

According to a Friday webcast to investors, long-time bull Cathie Wood isn't buying into the recent surge of legacy automakers.

Ford and GM are up 18% and 6%, respectively, far outdistancing the loss ofTesla. Ford surged 137% compared to the 50% jump ofTesla last year.

Ford hit its highest level in 20 years last week after it announced plans to double the production of its electric F-150 to 150,000 units. The electric version of the best selling pick-up truck, the Silverado, was unveiled by General GM and it resulted in a stock price boost.

Wood said that electric vehicle sales represent only 2% of traditional automakers' sales, and that they soared on those electric vehicle announcements.

"What if the other 98% or so are going to leave as the consumer preference shifts to electric?" Wood asked.

The recent drop in new-vehicle sales and non-existent recovery isn't simply due to supply chain issues, but rather consumer demand, and that's a big problem, according to Wood.

The company's gross margins are between 10% and 20%. Wood said that they don't have a lot of room for error.
If we're right and there isn't a 20% increase in sales, what would we do? If we're right on the used car market, they're probably going to be facing credit issues since they're hugely leveraged to the credit that people take out on their autos.

Wood thinks that electric-forward automakers likeTesla are a better buy than the traditional automakers, and that a company like Ford or General GM could post a surprise loss next year as they see increased spending to transition towards electric vehicles and less demand for their gas-powered cars.
Business Insider has an original article.