24/7 Wall St. Insights
- Ford Motor Co. (NYSE: F) stock is unlikely to recover the ground it has lost over the past two years.
- That is due in part to poor electric vehicle (EV) unit sales.
- Also: Dividend legends to hold forever.
Shares of America’s number two car company, Ford Motor Co. (NYSE: F), lost 2.4% to $9.86, barely better than its two-year low. The stock is down 38% over the past two years, while the S&P 500 is 25% higher. The share price of Ford’s cross-town rival, General Motors Co. (NYSE: GM), has gained 9% in that time.
What Happened?
Ford had the opportunity to become the U.S. electric vehicle (EV) unit sales winner based on the potential success of the Mustang Mach-E and F-150 Lightning, which carried the names of the company’s most iconic brands. The F-150 full-size pickup has been the best-selling vehicle in America for over four decades. Ford began to produce the Mustang in 1964, 60 years ago. The brand equity built by each is extraordinary; the company needs to be concerned that the EV versions tarnish that.
What occurred is that 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. This is a disaster, and Ford may not recover from it at all.
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 it would produce 600,000 EVs annually in 2024. Recently, the company returned to higher production levels of 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 gasoline-powered product sales to be strong for the company to be profitable.
No one will be able to say for sure what undermines Ford’s EV plans. Some say it 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.
Ford’s stock is unlikely to recover most of the ground it has lost over the past two years.
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