General Motors (GM) Stock: Morgan Stanley Upgrades to Buy as EV Tax Credit Removal Shifts Market Dynamics
TLDR
- Morgan Stanley’s new automotive analyst Andrew Percoco downgraded Tesla and Rivian to Hold while cutting Lucid to Sell
- General Motors upgraded to Buy with price target raised from $54 to $90, up 67%
- Tesla’s price target increased to $425 from $410 despite the downgrade to Hold
- Lucid price target slashed from $30 to $10 as analyst cites “EV winter” lasting through 2026
- The removal of the $7,500 federal EV tax credit in September creates headwinds for pure EV makers but benefits traditional automakers
Morgan Stanley shook up its automotive coverage on Monday as new analyst Andrew Percoco took over from Adam Jonas. The changes brought a major upgrade for General Motors and downgrades across the electric vehicle sector.
General Motors Company, GM
Percoco upgraded GM stock to Buy from Hold. He raised the price target to $90 from $54. That represents a 67% increase in the firm’s outlook.
The analyst sees multiple tailwinds for traditional automakers. These include reduced policy uncertainty and the end of EV tax credits. GM shares traded up 1.6% in premarket at $77.30.
President Trump eliminated the $7,500 federal EV purchase tax credit at the end of September. This policy change creates what Percoco calls an “EV winter” that will extend through 2026. Lower EV sales mean more internal combustion engine sales, benefiting companies like GM.
Strong Execution Drives Upgrade
GM has executed well on several fronts over the past year. The company completed a $10 billion accelerated share repurchase program. Management also realigned its EV and autonomous vehicle strategies.
The automaker raised its dividend for four consecutive years. It currently offers a 0.79% yield. Analysts note the company has been aggressive with buybacks.
Morgan Stanley highlighted GM’s industry-leading inventory management. The firm also praised the company’s incentive discipline. GM invested $4 billion in U.S. operations to mitigate tariff risks through supply chain realignment.
The company improved its International business segment performance. It also right-sized China operations to address competitive pressures in that market.
EV Stocks Face Downgrades
The analyst cut Tesla to Hold from Buy. He raised the price target to $425 from $410. Tesla stock dropped 1.3% in premarket trading to $449.13.
Percoco sees AI opportunities for Tesla through self-driving technology and humanoid robots. But he believes this potential is already priced into shares. Faster rollout of Tesla’s robo-taxi service could push the stock higher.
Rivian received a downgrade to Hold from Buy. The analyst kept his $12 price target unchanged. Rivian shares fell 2.8% in premarket to $17.44. The stock gained 35% year-to-date heading into Monday.
Lucid Faces Steepest Cut
Lucid received the harshest treatment with a downgrade to Sell from Hold. Percoco slashed the price target from $30 to $10. Lucid stock dropped 3.4% to $12.96 in premarket trading.
The stock had already fallen 56% year-to-date before Monday’s session. Only 14% of analysts covering Lucid rate shares Buy. Meanwhile, 36% rate shares Sell.
The average Sell-rating ratio for S&P 500 stocks sits at just 7%. The average analyst price target for Lucid is $17.
Analyst coverage shows 63% rate GM shares Buy. The average Buy-rating ratio for S&P 500 stocks is 55%. For Tesla, 39% of analysts rate shares Buy with an average price target of $401. Rivian has 30% Buy ratings with an average target of $15.
GM stock trades at $76.05, just 1% below its 52-week high of $77 after a 60.9% surge over six months.
The post General Motors (GM) Stock: Morgan Stanley Upgrades to Buy as EV Tax Credit Removal Shifts Market Dynamics appeared first on Blockonomi.
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