Ford Motor Company (NYSE: F) has seen its stock downgraded to “Equal-weight” from “Overweight” by Morgan Stanley analyst Adam Jonas. While GM (GM) received a price target boost.

The analyst believes that Ford faces “substantial headwinds” while the company’s strategy on electric vehicles (EV) is still unclear.

“The business remains saddled in Europe (which we value at negative $9bn) and is sub-scale in China vs. other major OEMs. We believe it can ultimately transition to EVs and can leverage strong fleet/commercial positions (F-150, Transit van) but faces substantial headwinds on high margin ICE products that face de-adoption,” Jonas wrote in today’s note sent to clients.

Jonas takes note of a successful year for Ford as the company has “successfully navigated through a very challenging 2020 while preserving its financial position”. The financial flexibility will pave the way for investing in EV products, but 2021 may prove to be a critical year for Ford.

“New leadership (new CEO, new CFO and other newly installed positions) gives the company an opportunity to move from restructuring mode/defense to investment/offense. Our $9 price target for the company gives them credit for remaining a going concern with positive terminal value, albeit still challenged by structural issues in key international markets such as Europe and S. America where we see long-term returns as a combined negative,” added Jonas in a note.

“We see 2021 as an important year to express a clear and decisive strategy on EVs, collaboration with VW, tech partners and how to balance what to insource and what to outsource. At this point, the market has largely discounted this potential and the risks in a balanced way, in our view, leaving the stock slightly above our $9 target.”

On the other hand, General Motors (NYSE: GM) has witnessed its price target raised to $53.00 per share from prior $44.00 after the company committed to go “all in” on electric vehicles.

“No hybrids. No Europe. Allocating $27bn towards EV investment by 2025 with a plan to launch 30 EV models by 2025. GM expects cost parity of ICE & EV by mid decade with 1 million EVs by 2025 and EV costs down 60% by mid-decade. GM has a head start vs. other legacy OEMs in the race for EVs at scale and a clear strategy to get there,” the analyst said.

According to Morgan Stanley’s projections, EVs should account for 27% of GM unit volume by 2030, 40% of revenue and 54% of GM EBIT. The carmaker is projected to win a 5.8% share of the global EV market by 2030, much higher than 2% share it has today. For instance, MS projects Ford to capture a 2.3% share of the EV market by 2030.

“GM is taking a more vertically integrated approach to its EV strategy vis-à-vis other players who are outsourcing key components such as battery cells, OS, e-motors and other critical items, including in some cases, complete manufacturing.”

In the short-term, Joans raised his 2021 EPS estimate to $5.50 from prior $5.15 due to less negative price and slightly more favorable mix in 2021 vs. 2022.

Ford share price trades 1.4% lower in pre-open Wednesday while GM stock is down 1.1%.