24/7 Insights
- Ford Motor Co. (NYSE: F) has a dilemma when it comes to its next quarterly report.
- Will strong electric vehicle sales equate to success in investors’ minds?
Ford Motor Co. (NYSE: F) stock has put in a mediocre showing so far this year. Its improvement is just shy of the rise in the S&P 500, as the car company’s shares are up slightly more than 15%. That is well shy of the shares of crosstown rival General Motors Co. (NYSE: GM), which are about 37% higher.
Oddly, Ford has to show two things that clash with one another. If earnings are strong, it must sell large numbers of its gasoline-powered cars, particularly its pickups and sport utility vehicles. It also has to show that its $30 billion planned investment in electric vehicles (EVs) has yielded more than promises.
In the second quarter, Ford’s gas-hungry flagship, the F-150, had sales of 199,463, which was 37% of the period’s total company sales. The F-150 Lightning EV sales totaled only 7,902, up 77%, but it was a minimal number. Sales of its Mustang Mach-E rose by a considerable 47% but only to 12,645.
Ford is caught in a vice. The company said it would be able to have a 600,000 EV production run rate by the end of last year. Instead, its production is moving in the opposite direction. It will spend $3 billion to convert an EV plant to making the F-series Super Duty. The big pickup gets about 16 miles per gallon.
If Ford shows it has sold too many EVs when it releases earnings, it will create a concern about margins. If it has been unusually successful in selling conventional cars, many investors will be thrilled.
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