For years, investors have poured money into legacy automakers as a cheaper derivative play to Tesla and other high-flying electric vehicle stocks. But that may be the wrong strategy for those looking to participate in the highly anticipated EV boom, according to Morgan Stanley’s Adam Jonas. F 1M mountain Ford shares over the last month “While such logic makes sense in theory, it relied on the premise that the EV businesses of a legacy auto company would have a positive value… that the tens of billions of $ of investment in EVs could generate a positive economic return,” he said in a Tuesday note. “What investors seem to be waking up to today is the idea that the tens of billions of $ invested in EVs may be value destructive rather than value accretive.” Legacy automakers General Motors and Ford have underperformed in recent weeks, selling off as they grappled with strikes that shuttered factories and assembly lines for roughly six weeks. Month to date, GM has dropped about 15%, while Ford lost 21%. Shares have shed more than 15% each in 2023. GM 1M mountain Shares of General Motors over the last month While both companies — along with Stellantis — have reached tentative agreements to end the strikes, those new contracts equate to added costs. And this, coupled with rising interest rates that threaten demand and average transaction prices, is enough to keep investors on edge, Jonas said. “At the crux of the problem is a capital-intensive sector investing in unproven EV strategies amid a world of rising costs, lower prices, rising rates and slower demand,” he wrote. “Change the narrative or change the portfolio?” — CNBC’s Michael Bloom contributed reporting