Reflections on the humble yet revolutionary Model T, often dubbed “Tin Lizzie,” shed light on the remarkable foundation of the U.S. automobile industry laid by Henry Ford a century ago. Amidst America’s enduring love affair with mobility, Ford Motor (F) perpetuates the spirit of innovation with its latest foray into the electric vehicle (EV) market.
Ford and the Electric Vehicle Market
Following a temporary setback due to a slowdown in EV sales growth, Ford’s strategic pivot towards EVs remains robust, accompanied by a diversified approach encompassing traditional gasoline- and diesel-powered vehicles alongside hybrids. Despite EVs constituting a small segment of Ford’s revenue stream, the company boasts success with the Mustang Mach-E, positioning itself as a formidable player in the EV realm.
Remarkably, Ford’s specialization in fleet-based EVs caters to a niche market segment among small businesses, signaling a lucrative avenue for growth amidst the gradual paradigm shift towards electric mobility.
The Ascendancy of Ford Pro
Highlighted as Ford’s primary growth engine, the commercial division – Ford Pro – emerges as a major profit center for the company. With a burgeoning clientele of commercial customers opting for EVs, Ford capitalizes on software subscriptions and telematics services to enhance fleet management efficiency, hinting at a promising revenue stream projected to burgeon by 2026.
Bolstered by strong sales in both traditional vehicles and EVs, Ford Pro anticipates substantial profit growth, eyeing a substantial earnings surge in the coming years.
The F-Series Phenomenon
Anchored by the iconic F-series trucks, Ford’s formidable presence in the market is exemplified by the enduring popularity of these vehicles. With the F-series trucks reigning as the top-selling vehicles in the U.S. for nearly half a century, Ford’s profitability receives a substantial boost, particularly post-COVID-19, with a notable upswing in gross profits per unit.
Anticipating a steep rise in hybrid sales in 2024, Ford’s strategic alignment with evolving consumer preferences signifies a prudent move geared towards future growth and sustainability in an ever-evolving automotive landscape.
Synthesizing these facets, Ford Motor Company emerges as an enticing investment prospect, poised to regain its momentum after a challenging period. Despite a slightly steeper stock valuation than competitors, including General Motors (GM) and Stellantis (STLA), Ford’s robust performance trajectory bodes well for prospective investors eyeing a premium addition to their portfolios.
With a bullish outlook for 2024 and an ambitious record operating profit target, Ford stock presents an alluring buy opportunity, particularly below the $13.50 threshold as the company navigates towards a phase of accelerated growth and profitability.
