24/7 Wall St. Insights
- Ford Motor Co. (NYSE: F) stock has dropped 38% in two years.
- Its failure in the EV sector is part of the collapse of its share price.
- Also: Dividend legends to hold forever.
Over two years, Ford Motor Co. (NYSE: F) stock has gone down 38%, while the S&P 500 has risen 25%. The period was supposed to be when Ford became the clear U.S. electric vehicle (EV) sales winner, riding on the success of the Mustang Mach-E and Ford F-150 Lightning, both of which carried the names of the company’s most iconic brands.
What happened is Ford has never sold many EVs. Sales of the electric versions of the Mustang and F-150 are only a few thousand a month in the United States, compared to the total monthly new car sales of about 170,000. Ford has been a disaster.
In September 2021, CEO Jim Farley said Ford would have invested over $30 billion in EVs through the end of 2025. He also said in 2023 that Ford would produce 600,000 EVs per year in 2024. Recently, Ford returned to higher production levels of very profitable products like its gasoline-powered Super Duty pickup. Management realized that, while it lost over $1 billion a quarter on its EV business, it needed legacy product sales for the company to be profitable.
No one will be able to say for sure what undermines Ford’s EV plans. Some say that Ford made EVs that were not as good as those from Tesla Inc. (NASDAQ: TSLA). Others say Ford changed the prices of its EVs too many times, and consumers have become confused and unwilling to pay a premium for EVs compared to gasoline-powered models. Yet others will say the EV market became crowded as the world’s major car companies battled for U.S. market share.
What is certain is that Ford’s failure in the EV sector is part of the collapse of its share price.
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