Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Will Ford Dominate electric vehicles?

The Ford Motor Company (NYSE: F) the grand old name in the American auto industry could dominate electric vehicles.

Ford’s electric vehicle sales grew by 184% in May 2021, a press release claims. That sounds impressive but Ford (F) sold only 10,364 electric vehicles in May.

Yet electric vehicles now comprise between 6% and 7% of Ford’s sales. To explain, Ford sold 161,725 vehicles in the USA in May 2021. I calculate that 7% of 161,725 is 11,320.

Ford vs. Tesla (TSLA)

Although the numbers are low they show Ford is a leader in electric vehicles (EV). Teslarati estimates there were around 392,000 electric vehicles registered worldwide in April 2021.

In contrast Tesla (TSLA) produced 180,338 vehicles in first quarter 2021 and delivered 184,877, INSIDEVs estimates. Notably, Tesla’s rose by 75.6% between first quarter 2020 and first quarter 2021. Tesla’s total deliveries rose by 109% in the same period.

I think Ford’s EV sales could explode when its F-150 Lightning electric pickups hit dealerships next year. Ford sold 316,359 F-series pickups in the first four months of 2021. Ford claims overall orders for the F-Series rose by 4.7% in that period.*

Meet Ford’s Tesla killer the F-150 Lightning

Hence, Ford’s electric vehicle growth rivals Tesla although the All-Electric F-150 Lightning is not on the market yet. Ford hopes to sell the electric version of America’s best-selling vehicle the F-150 pickup in Spring 2020.

The F-150 Lightning could be powerful because it has two electric motors. They claim the F-150 Lightning offers 563 horsepower and 775 pound feet of torque.  Among other things, Ford claims the F-150 Lightning has 10,000 pounds of towing capacity. You could also haul 2,000 pounds in the bed.

The entry, (plain commercial) model, of the F-150 Lightning will retail at $39,974. The consumer models will cost between $52,974 and $90,474 depending on the options package.

The F-150 Lightning will offer drivers four driving modes; Sport, Normal, Tow/Haul, and Off-road for different uses. Ford’s engineers hopes the F-150 Lightning will accelerate from 0 to 60 miles per hour in four seconds. So yes, jerks you can be environmentally friendly and still hog the road at the same time.

Will the F-150 Lighting Kill Tesla?

Interesting features on the F-150 Lightning will include onboard scales that weigh the payload in the bed, a Pro Trailer Hitch Assistant that helps hooks up your trailer, and trunk. The Trunk is in the front where the engine of a normal pickup is.

The most intriguing F-150 Lightning feature is Ford Intelligent Backup Power enabled by the 80-amp Ford Charge Station Pro. Those features allow drivers to use the F-150 Lightning as a backup power source for their houses. You could also power electric tools from the F-150 for work in the field.

Ford (NYSE: F) plans four models of the F-150 Lightning, the Pro, the XLT, the Lariat , and the Platinum. The F-150 Lighting is not for sale yet but Ford is taking reservations for it online.

Strangely, I think the F-150 Lightning’s biggest selling point is lack of maintenance. Ford claims that F-150 Lightning’s maintenance costs will be 40% lower than those for a gas-powered F-150. In particular, the F-150 Lightning needs no oil changes.

I think Tesla Motors (NASDAQ: TSLA) will have a major problem if half the claims Ford is making about the F-150 Lightning are true. It appears Ford has a real electric pickup working folk will love, while all Tesla has is an ugly monstrosity that resembles a prop from a bad sci-fi movie: the Cybertruck. Even the Cybertruck’s name is ghastly, it evokes the Cybermen, a bunch of clunky Doctor Who bad guys.

Why Ford Needs Electric Vehicles

Skeptics will number why Ford Motor Company (NYSE: F) a company that has been building internal combustion vehicles for 118 years is going electric. The reason is simple, Ford’s traditional vehicle sales are in freefall.

Ford admits its total vehicle sales fell by 4.1% between May 2020 and May 2021. Similarly, Ford’s total truck sales fell by 11.6%. In contrast, Ford’s sport utility vehicle (SUV) sales grew by 48.6% in the same period. Moreover, Ford car sales fell by an astounding 62.4% between May 2020 and May 2021.*

I think Ford needs electric vehicles because its traditional auto sales are collapsing. However, you can blame that collapse on the COVID-19 pandemic which closed dealerships. Notably, Ford’s total retail vehicle sales fell by 11.2%, retail truck sales fell by 27.9%, and retail car sales fell by 63.2%. Conversely, Ford’s retail SUV sales rose by 28.9% in May 2021.

Ford needs electric vehicles to take the place of the collapsing car sales. In addition, Ford needs to beef up weak truck sales.

Is Ford (F) making money?

Ford (NYSE: F) is making money despite falling sales. For instance, Ford reported a quarterly gross profit of $5.133 billion on 31 March 2021.

The quarterly gross profit rose from $582 million on 31 March 2020. Similarly, Ford’s quarterly operating income rose from -$1.558 billion on 31 March 2020 to $2.464 billion on 31 March 2021.

In comparison, Ford’s quarterly revenues rose from $34.32 billion on 31 March 2020 to $36.228 billion on 31 March 2021. Stockrow estimates that Ford’s revenues grew by 5.56% in the quarter ending on 31 March 2020.

Ford Generates Enormous Amounts of Cash

Ford can afford to develop electric vehicles because it generates enormous amounts of cash. For instance, Ford reported a quarterly ending cash flow of $22.05 billion on 31 March 2021. In addition, Ford reported a quarterly operating cash flow of $4.492 billion on 31 March 2021.

The quarterly ending cash flow fell from $26.16 billion on 31 March 2020 and the quarterly operating cash flow rose from -$473 million on 31 March 2020. Additionally, Ford reported quarterly operating cash flow of $11.088 billion on 30 September 2020.

Ford had $46.107 billion in cash and short-term investments on 31 March 2021. The cash and short-term investments fell from $46.370 billion on 31 March 2020 and $57.13 billion on 30 June 2020.

Ford can also raise enormous amounts of money through financing. The Ford Motor Company reported a quarterly financing cash flow of $12.454 billion on 31 March 2020. Ford also pays off enormous amounts of debt. It reported a quarterly financing cash flow of -$7.793 billion on 31 March 2021.

Ford has enormous amounts of debt. Ford reported $153.966 billion in Total Debt on 31 March 2021. The Total Debt fell from $168.693 billion on 31 March 2020. Thus Ford paid off debt and accumulated cash during a pandemic.

What Value Does Ford Have?

The Ford Motor Company (NYSE: F) lost some value during the pandemic. Ford had $264.150 billion in Total Assets on 31 March 2020. The Total Assets shrank to $260.819 billion on 31 March 2021.

In contrast, Ford’s share price rose from $6.57 on 4 June 2020 to $15.88 on 7 June 2021. Consequently, Ford’s share price grew more than doubled in a year.

Ford management has suspended the dividend because of the pandemic. However, Ford last paid a 15₵ dividend on 29 January 2020.

I think Ford is a terrific value investment because it is a cash-rich company with a cheap but rising stock price. In addition, I think Ford could make enormous amounts of money from electric vehicles.

If you are seeking a cheap electric vehicle stock, Ford is worth a look.