Ford Faces Juggling Act With New Electric-Vehicle Plans Due Soon

Ford (F) holds an investor day Wednesday and is poised to discuss its strategy on EVs after unveiling an all-electric version of its marquee F-150 pickup truck. Ford stock fell midday Tuesday.


The auto giant faces a difficult juggling act. The industry’s new mantra is that the future is electric. Yet gas-guzzling trucks are Ford’s top seller, underpinning its profitability. Meanwhile, electric trucks are initially expected to weigh on profits.

But according to Ford, the Mustang Mach-E is profitable today and the Lightning F-150 pickup will be when it goes on sale next year, but the company has yet to provide details.

In February, Ford more than doubled its planned investment in electric and autonomous driving to $29 billion through 2025. Of that amount, Ford will spend $22 billion on EVs and $7 billion on autonomy.

Still, CEO Jim Farley has yet to boldly declare that the auto giant will ditch traditional fossil-fuel cars, as his counterpart at GM has.

Credit Suisse analyst Dan Levy is hoping Ford might provide a timeline to go fully electric as its archrival has. General Motors plans to go all-electric by 2035, and is pouring $27 billion into the EV shift.

Autonomous Driving Roadmap

Along with electrification, analysts at Deutsche Bank say an update on Ford’s global restructuring and its timeline to achieve margin targets is possible.

Ford is targeting an 8% annual profit margin, before interest and taxes, in the long term. At the same time, Ford’s contending with an expensive shift to EVs as well as the global chip shortage that has halved car production this quarter and will take a $2.5 billion toll on earnings this year.

Deutsche Bank analysts also think an update on Ford’s AV strategy and Argo AI possible. Recent reports suggest that Argo, a rival to Google’s Waymo and GM’s Cruise, has been making progress toward commercializing self-driving cars.

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Ford Stock Depends On The ‘Golden Goose’

Shares eased 0.4% to 13.02 on the stock market today. Ford stock eyes a 13.72 cup-shape buy point after clearing the 50-day line, according to MarketSmith chart analysis. The relative strength line is below the consolidation peak.

General Motors (GM) gained 1.3% Tuesday, below the 50-day line. Tesla (TSLA) shed 0.6%, well below the 50-day.

The F-150 Lightning will go on sale next year as Tesla, GM and Amazon (AMZN)-backed Rivian also are bringing new electric trucks and vans to market.

RBC Capital Markets analyst Joe Spak is expecting “a lot of focus” at Wednesday’s event on making the F-150 Lightning profitable.

“The F-150 is their Golden Goose. They have to protect that franchise,” Spak wrote in a May 24 note.

He expects the F-150 Lightning to get better and cheaper over time. “It’s imperative for Ford to gain that beachhead in electric pickups now to maintain their dominance in pickups over time,” Spak added.

In addition, Ford is set to discuss how it will leverage digital subscription services as cars become more connected.

At the start of the year, GM CEO Mary Barra introduced a new brand, called BrightDrop, aimed at commercial electric vehicles for goods delivery. Ford considers commercial vehicles an area of strength, and is likely to pick up the gauntlet.

Find Aparna Narayanan on Twitter at @IBD_Aparna.


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