Legacy automaker Ford (F) learned a few things from its foray into electric vehicles (EVs). One of the biggest points it learned was that affordability is in short supply in the EV field these days. It is also in short supply in gas-powered cars these days, but that is a different discussion. Ford means to change that going forward, but investors are less sure. Ford shares are down over 1.5% in Wednesday afternoon’s trading.
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Ford still means to build electric vehicles, even though its earlier foray therein did not exactly go well. Sales declines, no more federal tax credits, and a bit of deregulation all left the EV market, and Ford by extension, on the back foot. But Ford has taken lessons from one of its biggest competitors—the Chinese EV market—and is delivering a new proposition: inexpensive electric vehicles.
Ford CEO Jim Farley noted, “We got out of our high-end EVs, but what we decided to do is double down on our affordable ones. And that is what’s selling today around the world, not just in the U.S. You look at Australia, you look at China, you look at Europe. All those markets are moving to a pure EV being more of a commuter-type, low-cost vehicle. That’s really where the market has already gone.” “Cheap” in China means somewhere around $14,500 for a new car, which these days would likely be regarded as supremely affordable.
Quality Issues
Ford may have a bit of a problem with that notion, though, as the idea that “you get what you pay for” may pass through customers’ minds. Recently we saw how Ford is currently top of the automotive market for sheer number of product recalls. That notion got reinforced as Ford launched yet another recall, this time covering 140,201 Ranger vehicles in the United States.
Reports note that, this time, the recall is over a matter of wiring. A set of damaged wires could cause a fire in the A-pillar area, which in turn could cause injury or a crash. Apparently, sun visor or headliner wiring could be positioned incorrectly, or have tape that is too thick involved. This can lead to damage, and from there, potential fires. The fix is the same as usual. Simply take the vehicle to the dealership and let them address the matter.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on three Buys, eight Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 33.37% rally in its share price over the past year, the average F price target of $13.79 per share implies 9.46% upside potential.
