Cathie Woodfounder of ARK Investment Managementreiterated her skepticism about car debt, saying a switch to electric vehicles could already make the situation worse falling used car prices.
Disruptive Innovation/Deflation: The year-on-year decline in used car prices could be worse than -23% if the EV shift occurs as quickly as we expect. Auto debt is likely to cramp. https://t.co/jR4AmXZTHG
— Cathie Wood (@CathieDWood) October 18, 2022
“Disruptive Innovation/Deflation: The year-over-year decline in used car prices could be worse than -23% if the EV shift occurs as quickly as we expect. Auto debt will probably cramp,” she tweeted.
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On Oct. 7, the ARK founder explained how a drop in the residual value of gas-powered cars could lead to serious losses in the auto debt market. “With the accelerating shift in consumer preference toward electric vehicles, used car prices and the residual value of all gas-powered cars are likely to fall, causing serious losses in the $1 trillion auto debt market,” she had said.
Interesting, Elon Musk responded to Wood’s tweet and indicated that he totally agreed with the idea. musk Tesla Inc TSLA is the second-largest holding in ARK’s flagship ARK Innovation ETF ARKK.
Amid the rising rate environment, rate-sensitive auto stocks have taken a hit this year along with the rest of the market. shares of Ford Motor Company f and General Motor Company GM are down over 44% year-to-date.
Continue reading: Tesla is ‘solution for business’: Cathie Wood says EV trend is unstoppable
Photo Courtesy: Ark Invest
