It was a decent, not optimal, earnings call by Ford (NYSE:F) who seems to have been banking more on future excitement rather than present performance. Indeed, the stock had little to no reaction to either aspect of Ford’s company, up a little less than 5 percent over the last ten days to a closing price of $7.11 at the close of the Wednesday’s trading session. While any excitement over their future lineup of new vehicles has clearly dissipated, it is hard to see Ford as a viable challenger in the ultra-competitive electric vehicle market moving forward.
Ford investors have been patient with the American car manufacturer, with the stock dipping to as low as $3.96 per share over the past year. It is difficult to measure Ford against other electric vehicle companies like Tesla (NASDAQ:TSLA) who have violent volatility from one day to the next. Ford has been steady, albeit unprofitable to invest in and investors looking at their new entries into the electric vehicle market may be a little too optimistic on what the company is capable of.
We are entering a new age in the world where driving cars is not going to be as essential a luxury as it once was. Millions of people around the world may be permanently working from home, cutting out the demand for cars that they may have needed previously to drive to the office. We have all seen how shopping has been affected by COVID-19 as well. Rather than lining up to enter supermarkets, many people have resorted to ordering them online and having them delivered. This is great for the future of the electric delivery truck sector, but not so much for cars.
One of the entry points Ford is banking on is the electric version of their popular F-150 pickup truck, one of the world’s top selling vehicles historically. While early estimates seem like the F-150E will top out with a range of 300 miles, that is nothing new for the electric vehicle industry and hardly a game changer. Tesla’s Cybertruck will reportedly offer a model that has a range of 500 miles, though price points may be much different for the two vehicles.
What about the Mustang Mach-E? The Mustang has a very limited niche market as it is, so how many of the muscle car fangroup is going to want to drive an electric version? Ford should have better luck with their planned electric Explorer-SUV launching in 2021. But other established companies like Volvo, Audi, and of course Tesla already have established SUV models that are on the road today.
The barriers to entry for Ford are numerous in the electric vehicle market. Long established companies have already beat them to the roads and the presence of industry leader Tesla is making everyone else play catchup, something Ford is usually too successful at. What is more, Ford will need to do this under new leadership as current CEO Jim Hackett is retiring in October. He will be replaced with current COO Jim Farley, the company’s fourth CEO since 2014. Shaky leadership and competition that is already on the road today, means Ford’s late entry to the electric vehicle market may not be as big of a splash as investors are hoping.
Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.
| Target Price | $15.36 |
| # of Analysts | 20 |
| Last updated | 2021-11-23 |
