Morgan Stanley’s head of auto and space research Adam Jonas is sticking by legacy automakers Ford and General Motors in 2024. Jonas reiterated an overweight rating on both Ford and General Motors stock in a Wednesday note. Jonas’ $15 per share price target on Ford implies about 22% upside moving forward, while his $40 forecast on GM calls for a more than 10% gain. Both stocks have had a sluggish 2023, with shares of Ford ticking up 6.1% year to date, while GM has added roughly 8%. The S & P 500, meanwhile, has added about 24% from the start of the year. The companies moved all in on electric vehicles in 2023 and have allocated significant resources and funding toward EVs. Consumers are making the transition away from the traditional internal combustion engine at a slower-than-expected pace, which pushed both companies to delay plans to open future EV producing plants until profitability in the sector improves. F GM YTD mountain Both legacy automakers have significantly underperformed compared to the broader market. Jonas, however, thinks the interim period as consumers shift from gas-powered vehicles toward EVs can be beneficial for both companies. “In our own research, we discussed the potential of ICE vehicles being perceived as liabilities to the auto companies. In hindsight, this view was premature at best, if not just completely wrong,” Jonas said. “Slower EV adoption means slower ICE de-adoption. Again, positive for Detroit OEMs.” Jonas added that a potential decline in interest rates can help underpin growth for both stocks moving forward as consumers regain more buying power on car lots. The biggest tailwind, Jonas added, is an improved capital allocation picture for both Ford and GM heading into next year. “Ford and GM are valued at around 2 years their combined capex + R & D vs. closer to 50 years for the broader market,” Jonas said. “When one considers that well over [half] of total OEM spending is on EVs and related investments, one can understand how much value can be preserved (if not created?) with a rebalanced and re-calibrated spending regime.” — CNBC’s Michael Bloom contributed reporting.