Ford Motor Company (F) on Q3 2023 Results - Earnings Call Transcript

Operator: Good day, everyone. My name is Gary, and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company Third Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator instructions] Please note this event is being recorded. At this time, I would like to turn the call over to Lynn Antipas Tyson, Executive Director of Investor Relations. Please go ahead. Lynn Antipas Tyson: Thank you, Gary. Welcome to Ford Motor Company’s third quarter 2023 earnings call. With me today are Jim Farley, President and CEO; John Lawler, Chief Financial Officer; and Peter Stern, President, Ford Integrated Services. Also joining us for Q&A is Marion Harris, CEO of Ford Credit. Today’s discussions include some non-GAAP references. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You can find the deck along with the rest of our earnings materials and other important content at shareholder.forward.com. Our discussion also includes forward-looking statements about our expectations. Actual results may differ from those stated. The most significant factors that could cause results to differ are included on Page 20. Unless otherwise noted, all comparisons are year over year, company EBIT, EPS, and free cash flow are on an adjusted basis. Now, I’d like to turn the call over to Jim. Jim Farley: Thank you, Lynn. Hello, everyone, and thanks for joining us today. I wanted to start by thanking the Ford team who worked tirelessly and creatively over the past several months to reach a tentative agreement with the United Auto Workers. I’m so pleased for our employees. This week, I was able to visit each of the struck plants. I was impressed by their preparation for start-up, and the feeling I got is people just want to get back to work. Once the deal is ratified, we will provide all of you a deeper look at the contract and its impact on our business. Right now, we’re focused on restarting three important assembly plants, calling back more than 20,000 Ford employees to work, supporting our suppliers as they restart, and shipping lots of Super Duties, Explorers, and Broncos to our customers. It’s been a challenging situation, for sure. Matter of fact, our business is never short of challenges, especially right now with the evolution of the EV market and new global competitors from China, as well as the technology disruptions. But I am more excited and motivated than ever. Our team is making tremendous progress every day toward building a Ford that thrives at the intersection of fantastic and iconic vehicles, terrific brands, and especially software and services. We are deep into the development of our future software platforms, which provide the foundation for rapid innovation and a profitable new software and services business and constantly improving experiences for our customers. We believe Ford+ is the right strategy to win in this constantly evolving industry transformation. We’re building a more dynamic and less cyclical company, and we are nowhere near peak profitability. We have the right team and talent, and we are in the process of building a culture of excellence and execution. In a moment, John will detail the quarter, which I would call mixed. The strength of our products and revenues and businesses defined definitely came through in our results. But at the same time, we were never negatively impacted by the strike, and our cost and quality remain a drag on our business. Now, last week, we made some important leadership changes. Kumar Galhotra as COO will now control the key levers for transformative change in our industrial system, powertrain, ICE, and hybrid products, vehicle hardware engineering, cycle plan, quality, supply chain, and manufacturing, and work in tandem, of course, with Doug Field, chief EV, digital, and design officer, to move us forward. I believe this will accelerate our progress on cost and quality, and I hope we get into that in the Q&A. These are my top two priorities. Overall, we see – we are seeing the clear benefits of creating three distinct growth businesses now with Ford Blue, Model e, and Pro. The story of Ford Blue comes down to product strength. Incredibly strong brands like Mustang and Bronco and Raptor, they have durable pricing power and real choice between gas and hybrid. Ford is America’s best-selling brand now through three quarters, even with the effects of the strike, and we have a wave of new products coming in the next few months, the new F-150, the Ranger, a brand-new Explorer, and Expedition and Navigator. In fact, close to 60% of our volume and revenues in the U.S. will be new and refreshed next year. I am so thankful we have kept our foot on the gas to freshen our ICE and HEV products as we enter a changing market. In Europe, we bring out new versions of Puma and Kuga or high-volume gas and hybrid SUVs, and the Ranger pickup and our Everest SUV that’s based on it continued to gain share in international markets. So, bottom line, Ford Blue will be strong and a growing business for years to come. We also remain bullish on Model e and our EV future, but clearly, the market is moving – is a moving target. I’m optimistic because customers are smart and are rational, and for many of them, EVs are a great choice. I’ve been spending a ton of time in our product development center with both Doug Field and Alan Clarke, and you should see the Gen 2 and Gen 3 EVs we’re working on. Our Gen 2 all-new full-size pickup truck, for example, is one of the most thrilling vehicles I have ever seen in my career. Let me be specific. Stunning performance like no truck has ever performed, building unexpected innovation for truck customers far beyond the normal truck attributes, a super flexible cabin that feels like a lounge or a tiny office. Take the wheels off this truck, and it’s still a mind-blowing product and a digital experience that totally is immersive and personalized. I’d take this truck seven days of the week over a Cybertruck. A great product is not enough in the EV business anymore. We have to be totally competitive on cost. Tesla actually gave us a huge gift with a laser-focus on cost and scaling the Model Y. They set the standard, and we are now making real progress on our second- and third-cycle EVs that are in the midst of being developed today as we get closer to the introduction. While our Gen 2 EVs were targeting to deliver an EBIT margin comparable to ICE by 2026, the dynamic changes in the market, pricing, adoption rates, regulations are forcing us to further reduce the cost of our EVs. The key levers to deliver this competitive cost structure are scaling, vertical integration, and batteries. So, let’s double-click on each of these three. On scaling, this is much more than building new facilities or scaling high-quality batteries or thermal propagation. We’re leveraging digital prognostic capabilities in our manufacturing lines to improve quality. We are also reducing complexity, and we are optimizing our vehicle design and engineering for manufacturability. Yep, we’re designing these vehicles for our manufacturing team. On vertical integration, this is the most fundamental change. We are insourcing batteries, inverters, scaling production of our drive units and gearboxes, and designing and producing unit castings in-house at Ford. In addition, on our next-generation utility vehicles, vertical integration will increase by nearly 50%. This level of integration, along with the new zonal electric architecture and designing in-house modules and battery cell to structure, will allow us to significantly reduce material cost. Now, none of this will be easy, and it has some risk, and you’ve seen our competitors struggle as they build out and ramp up these capabilities. So, we are so glad we started years ago on this journey. And finally, batteries. They’re the single biggest cost component of any EV. Our more energy-efficient Gen 2 products, we use extreme aero to get the very smallest batteries possible for competitive range. And with our LFP batteries, we’ll have the lowest or one of the lowest-cost batteries assembled in the U.S. Our overall EV priorities are very clear, disciplined capital allocation and investment that drives profitable, high-returning and enduring EV business, and we will constantly balance growth, scale, and profitability. These great EVs will be paired with modern shopping and buying experiences that are transparent or have non-negotiated pricing and a streamlined checkout and delivery that will come to life early in 2024. And this is also a significant cost reduction. I saved Ford Pro for the last because it’s a massive driver of Ford’s growth and profitability. Our competitors seem to be trying to cut and paste our strategy, but the reality is the moats we’ve built over many decades for our Pro business won’t be easy to cross. The network of literally thousands of local outfitters across Europe, North America, and China and customer-driven engineering we have for vehicles like F-Series and Transit is formidable across all those regions. Our commercial order banks are healthy. This may be a surprise to everyone. We see a large backlog of infrastructure projects. Thank you, 5G and roadworks. And we have very loyal customers. Fleet orders, for example, for the 2024 Super Duty are coming in faster than last year’s orders, and we expect strong demand to continue as more customers recognize what Ford has to offer in total. In addition to the new Super Duty, we are preparing to launch the new Transit Custom in Europe. Think of this product as a Super Duty for Europe. It’s a best-selling vehicle in the UK, not the best-selling commercial vehicle, the best-selling vehicle and the leading one-ton van in Europe. And it’s a key profit pillar for Europe and one of the reasons why we stayed there. When it comes to software and services, Ford Pro is the tip of our digital spear. Customers know and trust our vehicles, of course. And we’re building on this with software-driven services that provide businesses with data insights, vehicle access, even vehicle control, and functionality. This helps them drive productivity and efficiency in their fleet operations. And I’ve asked Ted Cannis to also lead our large and profitable aftersales business. His focus will increase our post-warranty service business and profitability. He’s already adding mobile service capability and delivering an effortless experience to both commercial and retail customers. There is so much upside in this aftersales, parts, repair, and collision business, especially with Ted leading it and for Ford Pro. I want to briefly touch on China where our strategy to turn our business around is gaining traction. The restructuring of our EV business there is nearly complete, and the internal combustion engine business is now profitable. We are now expanding China’s role to a profitable export hub, including Ford Pro. We’ve already exported a record number of vehicles so far from China to markets like Mexico, South America, and Asia. There is so much more opportunity ahead for us. Yes, the China market is extremely competitive in the middle, but Ford can succeed by staying asset-light, partnering where it makes sense, and competing in very narrow segments where we can clearly win like commercial vehicles, off-road vehicles, large SUVs, and Lincoln. Finally, I’m so pleased to have Peter Stern on today to share more about our newly formed Ford Integrated Services, which will create and market valuable software-enabled customer experiences across Blue, e, and Pro. Now, this is transformational because the cornerstone of Ford+, the plus in our plan, is creating incredible customer services and experiences enabled by not just hardware but software. There’s simply no one in the world better able than Peter, who is the driving force behind services at Apple, to build this strategically vital business for us. Peter, over to you. Peter Stern: Thanks, Jim. I’ve spent my career creating new customer experiences and launching businesses at the intersection of hardware, software, and services. And I came to Ford because this company puts that kind of innovation at the center of its long-term strategy. As you said, it’s literally the plus in Ford+. Now, over two months in, I’m even more excited to be here and to be part of this exceptional team that’s working together to bring the Ford+ plan to life for our customers, employees, and shareholders. Our vision for integrated services is to transform every aspect of the Ford customer experience across our three segments. We’re making our vehicles even more connected, convenient, productive, secure, and exhilarating. Over the past couple of months, we’ve identified a portfolio of services that will improve our customers’ lives and businesses by building on our industry-leading early successes with Ford Pro Intelligence and BlueCruise. This portfolio will elevate the Ford brand and introduce us to millions of new customers who may have never considered a Ford before. It will drive new high margin, cyclical recurring revenue streams for Ford and result in stronger relationships with our customers. And we’ll do this while adhering to the values that distinguish Ford from our competitors, like our respect for customer privacy, safety, and very importantly, choice. Whether you choose to add our services or not, you’ll have an amazing vehicle. Our momentum around software and services is building fast. Here are three examples. First, Ford Pro Intelligence builds on Ford’s industry-leading share in the commercial vehicle space by making the people who drive our vehicles even more productive and by reducing total cost of ownership. Adoption of vehicle telematics, fleet management, and charging optimization were up 20% sequentially in the third quarter, and our average revenue per subscription was up nearly 10% over the past six months, both contributing to strong revenue growth. And we’re still in the early stages of our rollout. We ended the quarter with 476,000 paid subscriptions for our commercial solutions, a jump of nearly 50% year over year. And we have an ambitious product road map for Pro. For example, over the next few weeks, we’ll launch the Ford Pro dashcam. This product uses machine vision and in-vehicle intelligence to detect in-cab and on-road events, simplify fleet operations, and encourage safer driving. While we’re still early in our journey, Pro Intelligence is an area that we’ll continue to expand and drive value for both our customers and Ford. Second, in September, we announced that the 2024 F-150 will be the first vehicle available in North America with Ford Stolen Vehicle Services. This is a fully integrated theft prevention and recovery service that provides unique features like inclination and movement alerts. So, you get notified if your truck is jacked up or moved while the engine is off. And third, BlueCruise is one of the most consequential consumer applications of artificial intelligence in the world today. Some of you experienced our last version at Capital Markets Day. If you haven’t felt what it’s like to take your hands off the wheel and your foot off the gas and let BlueCruise take over steering, acceleration, and braking, please visit a Ford dealer, so we can demonstrate it. Launch to date, our vehicles have been driven hands-free for 125 million miles. That’s the equivalent of 500 trips to the moon, which I imagine would be largely hands-free as well. Real-world driving data from Mustang Mach-E vehicles using BlueCruise shows a more than 10 times reduction in lane departures compared with unassisted driving. And for the second time in a row, BlueCruise was just rated the best hands-free system on the market, and this was based on BlueCruise 1.0. BlueCruise 1.3 is rolling out now and adds lane change support and other refinements that keep drivers in hands-free mode, on average, five times longer than version 1.0. Our technology team, led by my partner, Doug Field, is the best in the business, and BlueCruise is the proof. Despite these encouraging successes, what we’re about to do in Integrated Services won’t be easy. Our multi-year playbook depends on our next-generation vehicles that are even more connected. We must also round out our customer-centric portfolio of services and evolve our customer relationship management technologies. Our dealers are a key competitive advantage for Ford, and with them, we need to make it easier to become and stay a services customer. We need to build a relationship centered around the customer, not the vehicle, because in the services space, the sale of the vehicle should be the beginning of a beautiful long-term relationship with our customers. And that necessitates not only new people, processes, and technologies but also new measures of success. So, as we progress in our services evolution, you’re going to hear us talk about key metrics like addressable units in operation, attach rates, and average revenue per subscription. And as we move each of these levers in the context of a low-variable cost, high-margin service business, it will have a multiplicative effect on profits. There’s incredible value to be unlocked here for our customers and for Ford, and I’m proud to be a part of the team making that happen during this pivotal moment in our history. John, over to you. John Lawler: Thanks, Peter. Through the first three quarters, we delivered 9.4 billion in adjusted EBIT, a strong result that is indicative of our underlying run rate of the business. Now, given our year-to-date performance, we were on track to comfortably deliver our full-year adjusted EBIT guidance of 11 billion to 12 billion. With that said, the UAW strike created significant uncertainty regarding our full-year results, and even though we have reached a tentative agreement and our employees are starting to return to work, we have withdrawn our guidance for the year. This is in part because of the continued disruption in the industry with the ongoing strikes, the follow-on impact to our shared supply base, the ramp up of production in our plants and at our supplier partners, as well as other ancillary effects. And to provide some context, in the third quarter, the strike had an EBIT impact of roughly $100 million, and so far, the strike has trimmed about 80,000 units from our plant. This would reduce 2023 EBIT by roughly 1.3 billion. Once we have a ratified agreement and begin to ramp operations, we will be in a better position to update you on our full-year guidance. So, let me now turn to our third-quarter results, which was once again – it once again showed our Ford+ plan in action and the benefits of our diversified portfolio. Our leading Pro business and resilient ICE and hybrid products continue to deliver solid results that more than offset the investments we are making in our EV future. Our revenue remains strong, up 11%, reflecting a product lineup that resonates with customers, driving higher net pricing that remains resilient. Whole sales were flat, dampened by supply constraints affecting both F-Series and Transit production, additional unit holds for quality assurance, and the first UAW work stoppage for Ford in almost 50 years. Adjusted EBIT in the quarter was 2.2 billion with a margin of 5%. Both improved year over year. However, costs increased, underscoring the fact that we still have more work to do, especially on warranty expense and material cost. Adjusted free cash flow was 1.2 billion in the quarter, down year over year, driven by unfavorable working capital. Through the first nine months, we generated 4.8 million of adjusted free cash flow resulting in a conversion rate of 51%, in line with our target range. Our disciplined capital allocation continues to drive strong free cash flow, which will be critical as we adjust our spending to match the pace of EV adoption. We ended the quarter with over 29 billion in cash and 50 billion in liquidity, one of our strongest quarters ever, and this includes the new 4 billion contingent liquidity facility we put in place in August to help withstand uncertainties in the present environment. Now, turning to our customer-focused segments. Ford Pro generated EBIT of 1.7 billion and delivered a strong double-digit margin of 12%. Both metrics improved, driven by our Super Duty and Transit franchises that helped deliver a 16% improvement in revenue that’s reflecting strong demand and continued pricing power. In addition, we are launching a new version of our flagship product in Europe, the Transit Custom, which, along with the new Super Duty and F-150, will give Pro its freshest vehicle lineup in years. We also continue to see strong growth in both our new software subscriptions and mobile repair orders, up roughly 50% and 200%, respectively, for the quarter. Regarding Model e, our EV start-up incurred 1.3 billion of losses in the quarter, reflecting continued investment in our next-generation products and a more challenging market for our Gen 1 products. Given the dynamic EV environment, we are being judicious about our production and adjusting future capacity to better match market demand. For example, we have taken out some Mustang Mach-E production, and we are also slowing down several investments, including making a decision with SK On to delay the second BlueOval SK JV battery plant in Kentucky. And we have also said we are evaluating our BlueOval Battery Park Michigan plant to determine the best path forward. In fact, all told, we have pushed about 12 billion of EV spend, which includes CapEx, direct investment, and expense. The ultimate success of our EV transition will be driven by our Gen 2 and Gen 3 products, which will be cost-optimized and guided by the learnings of our first-generation vehicles that are currently in the market. Turning to Ford Blue. In the third quarter, we delivered EBIT of 1.7 billion, up 300 million, driven by lower commodity costs and higher net pricing that more than offset higher warranty costs. The higher warranty was driven by recalls and higher per unit repair costs due to inflation. Importantly, Blue continues to be profitable in all regions with a strong, fresh portfolio poised for continued global success. Hybrids also continue to be a success, a strategy we’ve had in place now for almost two decades. We are the clear leader of the hybrid pickup truck segment in the U.S, thanks to Maverick and F-150. We expect to extend its lead next year when we introduce our refreshed 2024 F-150 with more advanced technologies. The F-150 Powerboost hybrid not only offers a 25% improvement in CO2 emissions, but on average, they have more – they are more profitable than our highest-volume gas powertrains. And hybrids aren’t just limited to North America as we are launching a Ranger for Europe and IMG next year. Ford Credit generated EBIT of 358 million. As expected, our results were down year over year, reflecting lower lease residuals and financing margin and the non-reoccurrence of derivatives market valuation gains. Credit loss performance remains strong and below our historical average but continues to normalize. Auction values remain strong but are down sequentially, in line with our expectations. Finally, turning to software and services. We continue to see sustained quarter-over-quarter growth in subscriptions across all our business segments and, most importantly, at gross margins of around 50%. And our next-generation digital platform will enable a step function change in capability, allowing us to scale and deliver value to both our retail and commercial customers even faster. And as Peter highlighted, as we continue to build out our capabilities here, we expect it to be a significant source of future value creation. In closing, there’s obviously a tremendous amount going on in our business, but I’m confident in our Ford+ plan and the underlying run rate of our business. So, that wraps up our prepared remarks. We’ll use the balance of the time to address what’s on your minds. Thank you, and operator, please open the line for questions. Operator: We will now begin the question-and-answer session. [Operator instructions] Our first question today is from Adam Jonas with Morgan Stanley. Please go ahead. Adam Jonas: Thanks, everybody. So, John, I know you pushed out the 12 billion of the direct and capital investment and other expenditure on EVs, but I guess I’m saying – I’m interpreting that as just temporary, that you still plan on spending it. So, my question is, how long can you keep allocating 10 billion a year, round number, to EVs? John Lawler: Yes. So, Adam, we’re going to match demand and capital needed to meet that demand. You know, the first step here is given the flatter growth curve that we’re seeing relative to what the industry expected and we expected, we’ve made this decision to push out 12 billion of capital expenditures, but it doesn’t mean that we’ll actually go ahead and pull the trigger on it if we don’t need to. And we’re going to look at the overall EV business and be balanced about that. There’s a lot that’s going to change between now, in ‘26, and ‘30, and we’re going to adjust appropriately. So, it’s something that’s going to adjust as we move and how that business develops, and we’ll adjust that capital allocation appropriately. And we’ll change our strategy and make different decisions as well. And one of the other things I’d say is that – well, I’ll pass it over to Jim because Jim has something he wants to say. Jim Farley: Hey, Adam, thank you for your question. I just want to emphasize the importance of our Gen 2 and Gen 3 products because they’re very transformation in our profitability in EV. You know, we’ve learned a lot in Gen 1. We’ve reduced the material costs. We’ve got the learning loop on the software. We learned how to scale batteries. We have the LFP battery now. We’re starting to ship to customers, but there’s only so much we can do on Gen 1. On Gen 2, I said – as I said, we have a totally different approach from aero vertical integration designed for manufacturability. And there’s a lot of other things we can do beyond allocating less capital to battery plants, for example. We’ve learned a lot about derivatives like rally. We’re going to push services a lot more like Level 2+, Level 3 autonomy. And we really plan on even redesign or improving the scale of a components by working with other companies. And the other big breakthrough is going to be which we’re designing in parallel the Gen 3 products where we use the battery as a structural member of the vehicle. We go to low-cost sourcing, go to smaller vehicles. We maximize unit casting even more than we are and radical cost reduction in our distribution. I think the other thing that’s important to understand about Ford’s strategy on EVs is Pro. We actually followed a very different strategy for Pro using a multi-energy platform. So, we didn’t bet on pure electric vehicles for Transit, for example, and we’re now launching the Transit Custom in Europe, and that has diesel gas, and it will have eventually hybrid and pure electric. That’s a very different bet in our Pro. We’re even starting to export Pro vehicles from China to develop markets around the world that are pure electric. And that part won’t change our product strategy. Adam Jonas: Appreciate that, Jim. Maybe just a follow-up. On hybrids, you pointed out in the prepared remarks the growth there, and I think you’ve made comments that technology is something you want to lean in on more as a transition. Not that you won’t continue to sell your Gen 1 EVs, but that there is just real demand for hybrids. Can you refresh us as you kind of turn that dial back up on hybrids categorically, how that – how the margins on those products might compare to your ICE – your normal ICE margins? Is it accretive? Is it kind of in the ballpark? I didn’t know if there was any kind of sacrifice or gap there between hybrid and the normal pure ICE. Thanks. John Lawler: Yes. You want me to jump in, Jim? Jim Farley: Yes. John Lawler: There’s added costs as you’d expect for the battery and the motors, etc. But if you look at – let’s just take F-Series, for example. If you take the hybrid on average, they have a higher margin than our highest-volume gas versions because of the mix and what we have in the vehicle and the pricing we can get for the hybrid technology and the fuel efficiency that comes along with that. And one of the things we learned about hybrid, because we’re executing very differently than our first-gen hybrids, is we have Pro power on board. We have a lot of other attributes that people are willing to pay for, like F-150 powering a jobsite or your house as back up energy. That’s another advantage of having those batteries that maybe some of our competitors haven’t had the same pricing power. The F-150 now, a hybrid, is up 40% year over year, and we think the new F-150 new hybrid will be 20% mix, and it may be the best-selling hybrid in the United States. So, our hybrid strategy is a little different than our competitors because the work cycle for our products are different, but hybrid has a really big place. We’re trying to challenge ourselves, Adam, to execute hybrids, so they do more than just propel the vehicle for pricing power. Adam Jonas: Thanks, Jim. Thanks, John. Operator: The next question is from John Murphy with Bank of America. Please go ahead. John Murphy: Good afternoon, guys. Just a first question, Jim, on warranty and an accelerated – sort of headwind, on a year-over-year basis, accelerated a bit in the quarter. But if I look at the full-year numbers, even if we added back this – I think it’s Slide 32. If we added back the 1.7 billion on warranty to the 9.4 billion in EBIT you’ve done year to date, you’d already even be in your range in the first three quarters of the 11 billion to 12 billion in EBIT you’d been talking about before. So, I mean, it’s a major issue here for the numbers and results in cash flow. What’s going on, and how are you going to get a handle on this and reverse this hopefully in the next year or two? John Lawler: Yes. So, Adam, that’s exactly right. One of the things we’re – sorry, John. One of the things we’re seeing is that it’s not just the quality issues which are an important piece of this, and I think Jim wants to comment on that. But we’re also seeing tremendous inflation from the dealers on the repair costs. And that’s driving quite a bit of it. If you look at the increase that we had in the quarter for the warranty on a year over year, the 1.2 billion, and say that about 300 million of that was inflationary costs and roughly 900 million was the issue with warranties. So, that’s what we’re seeing there. And the issue around the quality that’s something that Jim’s going to be going to cover here. Jim Farley: Hey, John, again, thanks for your question. I want to slow it down a little bit and explain kind of our operational headwinds, not just quality but cost as well, and give a little bit of context and maybe highlight some of the stuff we’ve done but the work we have to do. A couple of years ago, when we started as a management team, the team that’s doing cost and quality is same team, and we have a lot of revenue power in the company. But we also have a lot of technology, and that technology that we rolled out like cameras before our competitors, it puts a huge burden on that electric architecture with a lot of extra modules and software. We definitely had the largest complexity customer-facing of any brand, and we also ran the business on products instead of platforms and systems. Our engineers and supply chain team did not have competitive tools like IT systems and parts release IT. We weren’t cooperating with the suppliers the right way on cost reduction. We kind of negotiated them every year, but we weren’t really getting into redesigning the parts and getting the complexity out of the suppliers’ manufacturing system. We didn’t really use a lot of strategic sourcing. So, we had a lot of concentration, our suppliers, and lack of leverage. We had inconsistent application within our manufacturing system for our QOS. So, some plants were fantastic like in China and Mexico. All the plants were completely uncompetitive and run differently. And we traveled hopefully on a lot of the launches. The gateways, we would have some issues, and the team had, kind of a hero mentality to try to close them out at the end of the launch, and we would get in trouble. I’m really proud of the progress we made like in the last 18 months, but it’s maybe just the tip above the water and the low-lying fruit. We now have to get after that systematic issue and those issues that I mentioned. On complexity, we have reduced the new F-Series from 1.4 billion combinations to less than 1,000. And on our new SUVs, we reduced the customer-facing complexity by over 90%. Our QOS execution is getting better. We’re about 10% improvement in our problems at three months in service, which is a lot of progress for North America. So, the initial quality is getting better. We now have the talent, both the expertise but also the execution talent. We’re now starting to strategically source our EV components, which we now can apply to our ICE business. I’m really proud of the launch progress we made. We’re now seeing launch spikes we’ve never seen in a decade at Ford. We are slowing down those launches, and in the case of Super Duty, its cost is $1 billion, but it was the right trade because it prevents a lot of recalls and issues down the road for the company. And we have made progress on material. We have billions of dollars of opportunity next year, but we have to deliver and release the parts, and I’m very confident that Kumar’s new organization will be able to really get after the part of the iceberg that’s below the water. That’s been a problem at Ford for decades. Thank you for asking your question, and I just wanted to take a little extra time to give the full context. John Murphy: That’s great. Maybe I’ll just sneak in one follow-up. You know, EV demand is not materializing quite as robustly as we were expecting this year. Pricing is a little bit down. Costs are going to be up with labor. So, I mean, as you mentioned, EVs are going to become more challenging going forward. But when you think about like a program or a product like the Explorer that we have, at least in car, where it’s launching in calendar year ‘25 as a model year ‘26, and you might disagree or agree with that, but that product is coming at some point soon. That was an EV variant and an ICE variant we had and we were expecting, and it would have been sort of an expectation that maybe you would have crossed out that ICE variant and just had an EV six months ago. But now, actually, things have switched in the other direction. You might actually cross out the EV and just keep the ICE. I mean, how are you making these decisions right now with sort of these tectonic shifts going on? I mean, there’s data. There’s consumer groups and all sorts of stuff, but they’re incredibly difficult and impactful decisions that you have to make. What is the process, Jim, that you’re going through on these powertrain decisions as you’re going through the product launches over the coming years in planning? Jim Farley: Yes, got it. So, things are changing. You know, EVs are still in high demand. It’s just, as you said, the pricing is much lower, and there’s a lot of overcapacity in the middle of the market. For us, I think we’re – our EV strategy and our ICE strategy is to go after customers we know really well. And so, on our ICE and hybrids, very much of a loyalty target. And in the case of EVs, many of the same segments, but a conquest strategy. And I would say we feel very confident on that strategy because Ford is – has a great reputation in those segments like full-size truck or pickups or vans, commercial vehicles or three-row crossovers, but our products are not substitutional because the customers who we’re going after are different, but they are the same segment. So, we know the use cycle really well, but the innovation will be pointing in different things. The F-150, I think, is probably the best example at Ford because we have world-class ICE. We have a hybrid that’ll probably be 20% mix. And then we have lightning and the next-generation lightning that we’re working on right now. And when you compare the ICE, the hybrid F-150 to the EV F-150, you will be surprised at how much more conquest the vehicle is executed. And we believe that innovation will give us pricing power for those EV conquest customers. The first generation has helped us there, but I think that’s our strategy. As far as the changeability of that strategy or flexibility, we certainly have choice, but as John mentioned, we’re really flexing the capital and the timing of the capital, especially around battery plants and overall manufacturing capacity. So, we’re not changing the product strategy, but we are flexing, and that’s our bet, is that we will flex the capacity. From a product planning standpoint, we’ve made, I think, really good bets on the ICE and HEV side in case the EV market is not as fast as we thought. We have affordable Mavericks. We have a strong international business now with Ranger and Everest. Those markets won’t go EV anytime soon. And the markets where we’re in, like F-150, Super Duty Pro, they’re not duty cycles that are going to go EV, and we have really fresh product. So, our bet is maybe different than others who just said, look, we’re going to get rid of an ICE Explorer and go to an EV Explorer. That’s not our strategy. John Murphy: It’s very helpful. Thank you. Operator: The next question is from Dan Levy with Barclays. Please go ahead. Dan Levy: Hi. Good evening. Thank you for taking the questions. I appreciate, Jim, the commentary that you gave on warranty and just cost more broadly, but I wanted to ask the question maybe in a slightly different way. This is, obviously, as you pointed out, a lingering issue. I think you said at the CMD earlier this year, it’s a $7 billion cost gap versus your competitors for Blue. What exactly is the line of sight or how confident are you that these issues can be turned around? Just because these have been issues for some years. And specifically, in the context of your pivoting to new architectures here where there’s obviously going to be some uncertainty on your end, what gives you the confidence or the line of sight to actually turn around these cost headwinds? John Lawler: Yes. Maybe I’ll start, Jim, and then hand it over to you. What I would say is that there’s a real focus now in the company, and Jim mentioned it in his remarks, around excellence and delivering, right, execution. When you look at the real fundamental issues that we’ve had across the industrial platform, it’s the way we work together, our focus of the work, and the structure of the work, and there have been those that have thought this has been an issue for years and others that haven’t. And I think we’re finally starting – not finally, as a team, we are coalesced around those root cause issues. We have great new talent in the company, Liz Door, from a supply chain standpoint, her domain expertise is outstanding. Bryce Currie from a manufacturing standpoint, outstanding. And then in addition to having Doug, bringing Kumar back into the fold, who grew up in the system as a design and release engineer and understands the Ford system and understands the air states really well, having them all together now driving this foundational change is important. And as Jim said, it’s the area under the iceberg, right? It’s what’s under the water, and it’s the most important piece of it. And the progress isn’t showing up as quickly as we would like in the part you see above the water, but the change is being driven below the water. And it’s the same root cause issues that are driving the quality problems, as well as the cost structure issues. And it’s the material cost at about 4 billion, and now we have warranties about 2 billion, and then you have manufacturing, etc., in there. And so, it’s the talent. It’s what we’re attacking. It’s the relentless focus on excellence, and it’s the way we’re working together as a team to go after these issues. And having the new team in place and having the new talent in place and watching what they’re going after and how they’re working together as an integrated team is what we need to get this done. Jim Farley: And I would just complement that in two ways. On quality, our real test for our commitment, talent, all things that John talked about came together in the launches of our most important products like Super Duty. And I am so confident in our tackling these systemic issues because of what happened on our recent launches. The team doubled down on testing. They did the extra work on supplier quality and readiness in the factory and really tested the vehicle for failure. And we did something that Ford maybe hasn’t done in the past. We held the vehicle until it was right. And in the case of Super Duty, that was $1 billion-plus decision. And that was proof to me this team understands that quality is our top priority. That message was sent throughout the company. Everyone got the memo. On cost, on EV, I’m encouraged because we’re designing from scratch, and a lot of the talent we brought in approaches that cost is a pride point for them in designing it in. The real test for us as a leadership team beyond quality is going to be bringing our material cost and negotiated parts price cost down on our carryover ICE vehicles. That is going to be the test, and we believe we have more than $1 billion of ideas already in the hopper for this year, for 2024. And we got to deliver it on those ideas. They’ll test our standards from rust protection and NHV. They’re going to test our standards. They’re going to test our parts release process. It’s going to be – but it’s us to execute. Dan Levy: Great. Thank you. Just a follow-up quickly on pricing, which I think has continued to outperform beyond anyone’s expectations. Maybe you can give a little bit of voiceover on what you’re seeing on pricing, especially in light of all the questions out there on affordability and how long you think some of these pricing tailwinds can be sustained into next year. John Lawler: I think it’s different for each of the business segments, right? We’re continuing to see incredible downward pressure on pricing this year on the EVs, right? But Pro, really strong pricing power right now. As Jim mentioned in his prepared remarks, we’ve got really good strength in the orders coming in for the model year. You know, we’re a good ways through the model year, and the pricing is held. And then when you look at the fresh lineup we have on Blue, we’re continuing to see the pricing hold for the most part. Now, are we starting to see that there’s some pressure on pricing? Sure. And we said there would be, but it’s been more resilient than we thought this year. That’s for sure, especially through the third quarter. But affordability, we’ve talked about this before. Affordability is an issue. Right now, it takes a consumer about 14% of their monthly disposable income for a vehicle. Pre COVID and pre the inflation that we’ve seen, it was about 13%. So, we think it’s going to revert back to that, and then we think it’s going to happen over the next 12 to 18 months. And so, to do that, it would be about a net price reduction of $1,800. But we also believe that part of that’s going to come through the OEMs in lower prices. But it’s also going to come through dealer margins because dealers are still transacting at a much higher percent of MSRP than they have in the past. And so, it’s going to be both of those. Now, we expected some of that to occur throughout the year. So far, it hasn’t much. And so, I think you’re going to start to see that come through as we move into next year. Operator: The next question is from Rod Lache with Wolfe Research. Please go ahead. Rod Lache: Hi, everybody. I wanted to ask a couple things on EVs. I think that certainly – I mean, I don’t think – you’ve been saying that the deflation that you’re seeing in EVs has been steeper than you assumed. But I – obviously, your original plan assumed some level of deflation through 2026. I think it was even price parity with ICE in some cases, and yet you assumed 8% margin in that time frame. Am I correct in those assumptions that your ultimate view was that you would get to price parity with ICE? And if that’s the case, why – what do you need to do in order to push harder? Do you need to actually reduce prices even below ICE in order to achieve your plan? Or do you need to achieve even greater – a greater price premium? John Lawler: Yes, Rod, John. Exactly. If you look at our three-row SUV, the way we thought about that, our Gen 2 product was it’s going to have the exterior of size of an Explorer and the interior space of an Expedition. And so, when we looked at that and setting the targets for the team in 2026, we said, well, you should – we should start out with a revenue assumption that it will be priced on an ICE –as an ICE would be between those two to vehicles. And so, that’s how we set up the affordable targets that we gave the team to design to. And a lot has changed, but the team is working diligently to try to deliver that. And we are continuing to see pricing pressure in the EV segment, but right now, there’s still a premium to gas in many areas. So, I think what you’re going to find is, over time, that premium is going to reduce as we move forward. And that’s what we’re trying – we have built into our planning assumptions for our second-generation vehicle and then as well for our third-generation vehicle, that you’re going to see another step down on pricing so that these vehicles are affordable. And that’s all setting up our cost structure that we’re targeting and going after, which was the basis of setting our 8% margin. Rod Lache: Okay. So, that’s still your expectation, that you would get to an 8% margin and you would have a cost structure that reflects price parity with ICE? John Lawler: Yes, that is the target that the team is going after. There’s a lot that has changed, as you know, and the team is working through that. The key three elements Jim went over is most importantly, the size of the battery, the efficiencies of watts needed to move the vehicle, the vertical integration, the partnering on what we would say are commodity parts of the business, things that aren’t differentiating for additional opportunity there, the scaling and using the capabilities of the vehicle as we build out the manufacturing facilities to be as lean as efficient as possible. And the team is pushing hard to get every save that we can through there to build out our Gen 2 vehicles that are profitable and deliver ultimately the 8% target that we’ve set for them. Rod Lache: Okay. And just secondly, I’m assuming that you still view vertical integration and batteries and LFP is critical to achieving your cost targets. Just given all of the issues around that, can you just – and some of the pauses or delays that you’ve got on some of these plants, can you just give us an update on what the trajectory is to achieving those lower costs in batteries, and how is your plan changing? John Lawler: Yes. So, we’re continuing to move forward with the vertical integration on the battery itself, working on cell design. We’re working on the chemistries. As we said, we have no real change to what we’ve put out forward before on BlueOval Park battery plant here in Michigan. But LFP is definitely going to be part of our future EVs, and that is a very important cost-reduction step in our path for the Gen 2 vehicles. So, it’s a combination of all of that. It’s a combination of the battery size and the efficiency of the vehicle to get the lowest watts possible to hit the ranges that we’re looking to hit. It’s the vertical integration across the vehicle, the vertical integration across the battery, and then as well as the chemistries. And all of that comes together to drive the cost reductions we need and the team is working toward is that part of the vehicle’s target. Rod Lache: Okay. Thank you. Operator: And our final question today comes from Emmanuel Rosner with Deutsche Bank. Please go ahead. Emmanuel Rosner: Thank you very much. So, I appreciate your candid assessment of the EV business and as well as all the actions that you detailed in terms of trying to reduce the investment and losses in the near term. At the same time, you rightly acknowledged that impacting change – affecting change on the first generation is not going to be the easiest. You know, more change would come in Gen 2, Gen 3. So, any way you can just frame for us how much improvement can we expect during this first generation? You’re now running at something like a $5 billion annual loss on Model e. Not that long ago, a few months ago, you still had fairly near-term targets to bring that to EBIT positive. Obviously, a lot has changed. But then you’re addressing these changes with your actions. So, where does it go from here? Does it get worse? Does it get better? Can something be done before Gen 2 and Gen 3 in terms of improving the losses? John Lawler: So, you’re right, a manual step function change is going to be on the Gen 2s where we’ll have more degrees of freedom to make the types of changes I just talked about. On the Gen 1s, we’ve seen the price come down much quicker than we had expected, of course, and that’s showing up in our results. We’re continuing to work very diligently on additional cost and design reductions on the Gen 1 products, and the team is also working very diligently to minimize the impact of the lower prices in the near term, in the next couple of years before Gen 2 comes out. And so, it’s going to be a battle between managing the top line as best we can, adjusting the supply of products relative to demand so that we can balance the pricing from that standpoint and then working like crazy to put whatever cost reductions we can on that Gen 1 vehicle through to the bottom line. So, I think it’s going to be in the near term, it’s going to continue to be just that. It’s going to continue to be quarter to quarter. And the team working very diligently to hold as much revenue as we can and bring as much cost reduction through the product as we can. Emmanuel Rosner: Thank you. And then a quick follow-up on Ford Pro. Obviously, extremely strong business and very solid quarter, but at the same time, there was a little bit of a pullback in both volume and mix and margin in the quarter. So, can you just go over the factors that drove this and the prospects in timing for normalizing back up? John Lawler: Yes. So, when you look at Pro the volume was down a bit. Part of that was we had some disruptions or hiccups from some suppliers which cost us to lose some F-150 commercial volume in the quarter. We had normal seasonality as well like on motorhomes and things like that. And then when you look at Ranger in Europe, that was down a bit still because of the ramp that we have going on on the new Ranger. And then there was a little bit of improvement with Super Duty. So, I think you saw some seasonality. You saw some fluctuations due to some supplier constraints and some missed volume in the quarter. And then, of course we continue to see the strength of the pricing on Super Duty, which is showing up with the higher revenues, yet the volumes were down a bit. So, overall, I think it’s not that we’re seeing a significant reduction in the demand for our Pro vehicles. We’re not. The order bank is very robust. We have a lot of demand for the model year, and I think Europe Pro is going to continue to be performing at a high level as we move forward here. Emmanuel Rosner: Thank you very much. Operator: This concludes the Ford Motor Company third quarter 2023 earnings conference call. Thank you for your participation. You may now disconnect.
F Ratings Summary
F Quant Ranking
Related Analysis

Ford Motor Company's Stock Update and Safety Investigation

  • Ford Motor Company maintains a Neutral rating from Piper Sandler with a stock price of $10.25.
  • The stock has experienced a 2.5% increase, with a yearly high of $14.85 and a low of $9.06.
  • Ford faces a federal investigation into approximately 1.3 million F-150 trucks for safety concerns related to unexpected downshifting.

Ford Motor Company, trading under the symbol "F" on the NYSE, is a major player in the automotive industry, known for its wide range of vehicles, including cars, trucks, and SUVs. The company faces competition from other automotive giants like General Motors and Toyota. Recently, Piper Sandler updated its rating for Ford to Neutral, maintaining a hold action, with the stock priced at $10.25.

The stock's current price reflects a 2.5% increase, translating to a gain of $0.25. Throughout the day, the stock fluctuated between $10.01 and $10.25. Over the past year, Ford's stock has seen a high of $14.85 and a low of $9.06. The company's market capitalization is approximately $39.9 billion, with a trading volume of 102.6 million shares.

Ford is currently under scrutiny as federal regulators investigate approximately 1.3 million Ford F-150 trucks from model years 2015 to 2017. The National Highway Traffic Safety Administration (NHTSA) has received 138 complaints about these vehicles unexpectedly downshifting at high speeds, leading to rapid deceleration and potential crashes.

This investigation follows Ford's recent recall of over 240,000 Explorer models due to improperly secured seatbelts. The F-150 probe highlights significant safety concerns, as this model is one of Ford's most popular. The sudden downshift issue can cause the rear wheels to lock temporarily, complicating vehicle control and increasing the risk of accidents.

Ford Shares Drop 6% as Weak 2025 Outlook Dims Strong Q4 Performance

Ford Motor (NYSE:F) saw its shares drop over 6% in pre-market today after issuing a downbeat profit forecast for 2025, overshadowing its better-than-expected fourth-quarter results.

The automaker anticipates adjusted earnings before interest and taxes (EBIT) of $7 billion to $8.5 billion for 2025, a sharp decline from the $10.2 billion reported in 2024. Ford cited ongoing market pressures as key headwinds and warned that the first half of the year would be particularly challenging.

The company expects first-quarter EBIT to hover around breakeven, attributing the weakness to lower wholesales and a shift toward producing less profitable vehicles. Additionally, major production transitions at key U.S. plants in Kentucky and Michigan are expected to weigh on early-year performance.

Despite the cautious outlook, Ford wrapped up 2024 on a high note, delivering fourth-quarter earnings that beat expectations. The company posted adjusted earnings per share of $0.39 on revenue of $48.2 billion, exceeding analysts’ forecasts of $0.36 per share on $47.79 billion in revenue.

While Ford’s long-term strategy remains focused on adapting to shifting consumer demand and production realignments, investors appear wary of the near-term profitability squeeze and broader economic uncertainties.

Ford (NYSE:F) Maintains "Sector Perform" Rating by RBC Capital Amid Upcoming Financial Results

  • RBC Capital maintains a "Sector Perform" rating for Ford (NYSE:F), with a current stock price of $10.22.
  • Ford is expected to report a fourth-quarter earnings increase to 33 cents per share and a slight revenue growth to $43.25 billion.
  • Despite a positive earnings outlook, Ford's stock was downgraded by Jefferies analyst Philippe Houchois from Hold to Underperform, indicating a cautious stance.

On February 5, 2025, RBC Capital maintained its "Sector Perform" rating for Ford (NYSE:F), advising investors to hold the stock. At the time, Ford's stock price was $10.22. This recommendation comes as Ford prepares to release its fourth-quarter financial results, which are highly anticipated by analysts and investors alike.

Ford Motor Company, a major player in the automotive industry, is expected to report earnings of 33 cents per share for the fourth quarter, up from 29 cents per share in the same period last year. The company is also projected to announce quarterly revenue of $43.25 billion, slightly higher than the $43.21 billion reported a year ago. Ford has a track record of exceeding analyst revenue estimates, having done so in eight of the last ten quarters.

Despite the positive earnings outlook, Jefferies analyst Philippe Houchois recently downgraded Ford's stock from Hold to Underperform, suggesting a more cautious stance. This downgrade contrasts with RBC Capital's recommendation to hold the stock. Ford's stock has shown some volatility, with a recent 2.7% increase, closing at $10.16, and currently trading at $10.22, reflecting a 0.60% increase.

Ford's stock has experienced fluctuations over the past year, reaching a high of $14.85 and a low of $9.49. The company's market capitalization is approximately $39.90 billion, with a trading volume of 54.37 million shares. As Ford prepares to release its financial results, investors will be closely watching for any developments that could impact the stock's performance.

Jefferies Downgrades Ford to Underperform, Stock Drops 3%

Jefferies analysts downgraded Ford (NYSE:F) from Hold to Underperform, cutting the price target on the stock to $9 from $12. As a result, shares fell more than 3% intra-day today. The move reflected growing concerns over inventory management, strategic uncertainties, and cost pressures that could weigh on the automaker’s near- and long-term performance.

While a potential loosening of emissions regulations under a Trump administration offered some relief, the timing and scope of such changes remained uncertain. Meanwhile, Ford’s inventory levels continued to rise, reaching 96 days in November—26 and 18 days higher than General Motors and Stellantis, respectively—despite a 15% year-over-year increase in U.S. sales. The analysts noted that sustained production has supported the company’s reduced 2024 guidance but could make for a more challenging start to 2025.

Ford also faced critical strategic decisions in the coming quarters. These included the potential need to resize or exit its European operations, which currently contribute about 25% to its 2024 earnings per share. Additionally, the company’s yet-to-be-announced electrification strategy may focus on range-extender vehicles (EREVs), further complicating its EV roadmap. Persistent structural cost issues, combined with an $8.5 billion gap between warranty and quality provisions and actual cash outflows since 2020, added to the pressure.

The analysts highlighted that while Ford’s balance sheet was solid, it offered limited flexibility. Restructuring and warranty-related claims could leave little room for shareholder returns if the company aimed to maintain a conservative financial profile.

Ford Earns an Upgrade at Goldman Sachs

Goldman Sachs analysts upgraded Ford (NYSE:F) to a Buy, citing strong margin potential from its growing software and services business, particularly through its commercial arm, Ford Pro.

The investment bank expects software and physical services to account for 20% of Ford Pro’s EBIT by 2026, with paid software subscriptions expanding at an annual rate of 35-40%. Ford is targeting $1 billion in software revenue by 2025, driven by improvements in fleet services and advanced driver assistance systems (ADAS).

Goldman also highlighted Ford's cost-cutting efforts in both internal combustion engine (ICE) and electric vehicles (EVs) as key to offsetting industry challenges like slower demand growth and increased competition from Chinese automakers.

While Ford shares have dropped 13% year-to-date due to cyclical concerns and higher-than-anticipated warranty costs in early 2024, Goldman sees a 23% upside to its new 12-month price target of $13. The stock is currently trading at 5x next twelve months (NTM) EPS estimates, at the lower end of its historical valuation range.

Ford Motor Company (NYSE: F) Receives New Price Target from Deutsche Bank

On Monday, September 9, 2024, Deutsche Bank analyst Edison Yu set a new price target for Ford Motor Company (NYSE: F) at $11, suggesting a modest upside potential of 3.19% from its current trading price of $10.66. This valuation comes with a "Hold" rating, indicating that Deutsche Bank views Ford as a stable investment, but not necessarily one poised for significant growth in the near term, as reported by TheFly.

Ford, a leading global automotive manufacturer, finds itself at a critical juncture. The company's stock has been experiencing fluctuations, with recent trading sessions showing a slight increase of $0.08, or approximately 0.76%, to $10.66. This performance is part of a broader trend observed over the past year, where Ford's shares have swung between a low of $9.49 and a high of $14.85. Despite these movements, Ford maintains a substantial market presence, with a market capitalization of around $41.62 billion and a significant trading volume of 34,029,162 shares.

However, Ford's financial landscape is not without its challenges. The initiation of a class action lawsuit by Pomerantz LLP against Ford Motor Company underscores potential legal and financial risks that could impact shareholders and potential investors. This lawsuit highlights the importance of closely monitoring Ford's legal standing and its implications for the company's financial health.

The combination of Deutsche Bank's "Hold" rating and the ongoing legal challenges presents a complex picture for Ford. While the bank's analysis suggests a slight optimism regarding Ford's stock price, the legal uncertainties introduced by the class action lawsuit could pose risks to the company's financial stability and growth prospects.

Investors and shareholders of Ford must navigate these developments with caution. The potential for stock price appreciation as indicated by Deutsche Bank's analysis is tempered by the legal and financial scrutiny from the class action lawsuit. As such, Ford's future performance will likely be influenced by a mix of market dynamics, legal outcomes, and the company's ability to address and mitigate these challenges effectively.

Ford Motor Company's Strategic Position in the Automotive Industry

  • Ford Motor Company (NYSE:F) showcases a promising outlook with a potential stock price growth of 197.25%.
  • The company's solid financial health is highlighted by a price-to-earnings (P/E) ratio of 11.21 and a dividend yield of 10.25%.
  • Ford's strategic foray into the electric vehicle market positions it as a significant player amidst the high-growth EV sector.

Ford Motor Company (NYSE:F) stands as a testament to over a century of innovation and resilience in the automotive sector. With its establishment in 1903, Ford has evolved from producing the iconic Model T to a diverse lineup that includes trucks, commercial vehicles, and luxury cars. The company's strategic segmentation into Ford Blue, Ford Model e, and Ford Pro; Ford Next; and Ford Credit segments demonstrates its adaptability and commitment to meeting the varied needs of its customers, ranging from individual consumers to commercial fleets and governments.

Currently, Ford's stock is priced at $11.04, with an ambitious target stock price of $32.82. This indicates a potential growth of 197.25%, a figure that underscores the company's promising outlook. With a market capitalization of $43.89 billion and a price-to-earnings (P/E) ratio of 11.21, Ford showcases solid financial health. The earnings per share (EPS) of $0.96, coupled with a generous dividend yield of 10.25%, further highlight Ford's attractiveness to investors seeking both growth and income.

In the competitive landscape of the automotive industry, Ford's performance and potential can be contextualized by comparing it with its peers. For instance, Rivian Automotive, Inc. (NASDAQ:RIVN) and Lucid Group, Inc. (NASDAQ:LCID) show negative EPS and P/E ratios, indicating their current lack of profitability compared to Ford. On the other hand, established players like Toyota Motor Corporation (NYSE:TM) present a more comparable financial footing with a P/E ratio close to Ford's but with a significantly higher market cap. This comparison not only showcases Ford's competitive pricing but also its potential for growth amidst both traditional and emerging automotive companies.

The electric vehicle (EV) market, represented by companies like Tesla, Inc. (NASDAQ:TSLA) and NIO Inc. (NYSE:NIO), highlights the evolving dynamics of the automotive industry. Despite Tesla's substantial market cap and positive EPS, Ford's strategic foray into the electric vehicle segment through its Ford Model e division positions it as a significant player in this growing market. NIO's standout growth potential of 521.23% further emphasizes the high-growth nature of the EV sector, where Ford is poised to make its mark.

Ford's balanced approach, combining traditional automotive manufacturing strengths with an eye towards the electric vehicle market, positions it as a compelling investment option. Its solid financial metrics, significant growth potential, and strategic positioning within a competitive landscape underscore Ford's resilience and adaptability. Investors considering Ford's stock are looking at a company that not only has a rich legacy but is also geared towards future growth in the evolving automotive industry.