Morgan Stanley: Gasoline Industry Is About to Become Totally Worthless
The average energy investor is by now well aware of the sector's monumental shift from fossil fuels to renewable energy. Coal-powered power plants have been shuttering at an alarming clip as the price of electricity from natural gas and renewables undercuts them while wind and solar generation continue to gain the ascendancy.
But nowhere has this change been as dramatic as the transport industry, with EV titans such as Tesla Inc. (NASDAQ:TSLA) and NIO Ltd. (NYSE:NIO) now commanding substantially higher valuations than their imposing ICE brethren, General Motors (NYSE:GM) and Ford Motors (NYSE:F). Indeed, the global EV sector now carries a higher valuation than the global ICE sector despite accounting for less than 3% of new vehicle sales in 2020.
It's a situation eerily reminiscent of the thousands of buggy and whip companies that were rendered obsolete in the early 20th century.
But now, a section of Wall Street says the situation is a lot more dire than that.
Morgan Stanley has argued that traditional ICE makers are destined to become money-losers as early as 2030.
MS' analyst Adam Jonas says the market may be ascribing zero or even negative value for ICE-derived revenues at GM and Ford and has listed a variety of factors that are likely to transform the companies' once-profitable assets into potentially cash-burning and loss-making businesses.
Pivoting to EVs
Morgan Stanley is hardly alone in its very dim outlook of the traditional auto industry.
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