After trading above $10 most days since the start of 2021, Ford (NYSE: F) dropped below that level on worries about inventory, overseas sales, EV cost structure, and warranty costs. During that period, the stock peaked above $25 in early 2022.
The warranty and EV problems needed to be resolved when Jim Farley was made CEO in October 2020. Ford planned to invest $30 billion in its EV business and launched two flagships. These were the Mustang Mach-E crossover and the F-150 Lightning. The gas-powered F-150 is the best-selling car or light truck in the US.
Ford planned to make EVs at the rate of 600,000 a year by the end of 2023. It then pushed that to 2024. Ford backed away from those plans entirely. Its EV sales are a small fraction of its total monthly US sales.
Ford’s quality problems have plagued it for years. Earnings have been hit by hundreds of millions of dollars this year because of warranty charges.
Like many other legacy car makers, Ford’s business has been decimated in China, the world’s largest car market. Foreign car makers had 53% of the Chinese markets in July 2022. That dropped to 33% in July this year. In July, Bank of America suggested that Ford and General Motors (NYSE: GM) leave China entirely.
Jeffries recently moved Ford from “hold” to “underperform.” It moved its price target down from $12 to $9. It already looks like the change was a smart one.
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