Ford Stock Ends Year Down 19%

Investing

Published: December 31, 2024 9:15 am

For Ford Motor Co. (NYSE: F) shareholders, 2024 has been a brutal year. The stock is down 19%, against an advance of 24% for the S&P 500. To add insult to injury, the shares of its primary rival, General Motors Co. (NYSE: GM), are higher by 49% for the period. Warranty problems have battered Ford, as has an ill-fated investment of billions of dollars in its electric vehicle (EV) business. It did not help that CEO Jim Farley described China’s car industry as an “existential threat.”

24/7 Wall St. Key Points:

For Ford Motor Co. (NYSE: F) shareholders, 2024 has been a brutal year.
The stock’s underperformance reflects that Ford is running out of time to combat its challenges.
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What Went Wrong

Ford’s management believed it could take much of Tesla Inc.’s (NASDAQ: TSLA) business to the United States. In the third quarter of the year, according to CarEdge, total EV sales in America were 346,39. Tesla accounted for 166,923. Ford’s sales were 23,509. That put it behind Kia/Hyundai at 29,609 and GM at 32,095. Ford has little to show for an investment well into the billions of dollars. It lost over $100,000 for every EV sold in the first quarter of the year, which is a number that management disputes. A number even close to that signals an abject failure.

Ford’s warranty costs, which can be considered the costs of flaws in its products, added up to hundreds of millions of dollars every quarter this year. Ford does not give an exact figure, but the effect on earnings was $4.8 billion in 2023. Management continues to say it will address that major problem, but it has not.

Nearly every legacy car manufacturer in the world shares Ford’s China problem. The fact that Ford is part of that sector means headwinds are strong enough that they probably cannot be overcome. The problem comes in two parts. The first is that large car companies with operations in China have suffered massive drops in sales there. The other is that Chinese EV companies have started expanding worldwide with high-quality vehicles with low sticker prices.

This is the primary reason for Farley’s “existential threat” statement.

Ford’s share price reflects that it is running out of time to combat its challenges.

General Motors (GM) Price Prediction and Forecast 2025-2030

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