Bank of America auto analyst John Murphy’s annual presentation, Car Wars, highlights significant uncertainties in the automotive sector due to tariffs and a slower-than-expected growth in the electric vehicle (EV) market, particularly in the U.S. Compared to China, where EV market share approaches 50%, U.S. growth is stagnating. Automakers like Ford Motor Company have faced substantial charges, including $1.9 billion in expenses linked to canceled plans for an electric SUV.
Murphy warns of an increasingly volatile product strategy landscape over the next four years, influenced by a brutal price war in China that has led companies like BYD to slash prices by up to 34%. General Motors, once profiting $2 billion in China, now faces restructuring costs exceeding $4 billion as it adapts to deteriorating market conditions there.
Investors must remain cautious due to the potential for significant write-downs as automakers adjust to shifting consumer demands and competitive pressures. The current landscape calls for a long-term investment perspective, as stability and consistent growth in the EV market remain uncertain.
