Ford will announce earnings soon, and investors hope the No.2 American car maker will offer strong guidance. A look back at 2023 and early 2024 shows little reason for optimism about its current prospects.
Ford’s stock is down 12% in the last year, while the S&P 500 is 21% higher. Rival Toyota, which often sells more cars in the US than Ford, has posted a 35% jump in its shares over the same period.
Ford’s primary fumble is its EV business. A UAW strike and contract made its problems much worse.
Ford told investors its driving into the EV business would alter the company’s future. Gas-powered cars were moving toward a sunset due primarily to their effects on the environment. The Biden Administration and European countries announced aggressive EV market share goals. On April 17, 2023, the Administration said its goal was to have 50% of all new cars sold in the US powered by electric engines.
Among its most ambitious plans was announced on September 7, 2021. Ford would build massive EV facilities in Tennessee and Kentucky via an $11.4 billion investment. Fast forward to October 28, 2023. In a change of heart, Ford said it would delay $12 billion in EV investments across the company. Its market intelligence must have been wrong about how many people would buy EVs in America. CFO John Lawler said, “We are, though, looking at the pace of capacity we’re putting in place. We are going to push out some of that investment.”
Ford must not have seen its market share faltering fast as the EV market advance moved too slowly. Even Tesla’s earnings and forecast for 2024 were damaged by slow demand. Ford’s big EV product launches, which the Ford F-150 Lightning led, fell apart. It sold 750,789 of the big pickups last year. Lightning sales were a mere 24,165.
The UAW contract hurt Ford badly and compromised its ability to invest in new products. It will cost Ford $8.8 billion from when it became effective until April 2028.
Ford shareholders should consider themselves lucky if the stock holds its own this year.
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