In 2008, the publication of “Ford Model T: The Car That Put the World on Wheels” shed light on Henry Ford’s revolutionary launch of the Model T in 1908, kickstarting America’s love affair with automobiles. Despite its unassuming appearance, the Model T became the 20th century’s most influential car, accessible to the average American from 1908 to 1927. One notable anecdote recounts how it earned the nickname “Tin Lizzie” after triumphing in a 1922 championship race in Pikes Peak, Colorado, defying expectations with its durability and speed.
Today, Ford Motor (NYSE:F) seeks to recapture the “Tin Lizzie” magic with its foray into electric vehicles (EVs), epitomized by the “Model E.” While Ford’s electric ambitions were scaled back amidst a slowdown in EV sales growth in late 2023, the company maintains a diversified strategy encompassing gasoline- and diesel-powered vehicles alongside hybrids.
Despite EVs constituting a small fraction of Ford’s total sales, the company boasts the second most popular SUV-type EV in the Mustang Mach-E. Notably, Ford dominates the niche market of fleet-based vehicle operators, positioning itself as a frontrunner in the commercial EV space. The success of Ford Pro, its commercial division offering work trucks and vans, underscores its profitability and growth potential.
CEO Jim Farley anticipates increased adoption of EVs by commercial fleets, a trend that bodes well for Ford’s prospects. While profitability from commercial EV sales may not materialize until 2026, Ford mitigates losses by offering connected-car logistics and servicing contracts to buyers, bolstering its software and services segment.
Ford’s traditional stronghold remains its F-series trucks, which consistently outsell competitors and have seen a surge in profitability since the onset of the COVID-19 pandemic. Additionally, the company anticipates a significant uptick in hybrid sales, contributing to its optimistic outlook for 2024.
While Ford’s stock trades at a premium compared to peers like General Motors (NYSE:GM) and Stellantis (NYSE:STLA) based on price/earnings ratios, its promising trajectory in the EV and hybrid segments positions it for accelerated growth in the coming years. With Ford projecting a record operating profit of $10 billion to $12 billion, F stock presents an intriguing investment opportunity, particularly below $13.50 per share.
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