Wall Street sees opportunities for legacy automakers like Ford to stand out in 2024 despite the challenges the industry faces as demand for electric vehicles softens. Ford could make for a successful year by doing two things: continuing its strategic shift toward more profitable hybrids instead of heavy investments in less lucrative EVs and improving quality issues. 1. Shift to hybrids Ford is not willing to go broke on EVs. CEO Jim Farley is moving away from cars that don’t make money, like electric vehicles while doubling down on areas that do make money, like hybrids. Jim Cramer believes management should put more resources into the company’s “incredible hybrid business” to boost profits. Underscoring our optimism, total hybrid sales last week came in strong for the fourth quarter and the year. They grew 55.5% for the quarter while EV sales rose 27.5%. Internal combustion engine (ICE) sales were down 3.4% in Q4. For all of 2023, hybrids gained 25.3%, EVs rose 17.9%, and ICE increased 5.5%. With higher-margin hybrid sales topping the quarter and the year, the Maverick Hybrid was the best performer, with a 67% increase in 2023 sales from the year-ago period. The F-150 Hybrid also was a winner, with sales gains of 41% in 2023. Compelled to reduce its EV investments, Ford last month announced plans to cut production of its all-electric Lightning in half this year as it works to “match production with customer demand.” The Lightning was still a top seller for Ford, with sales up 54.7% for all of 2023. What does Wall Street think? Morgan Stanley and Wells Fargo analysts are taking a pretty pessimistic view of the auto industry in the year ahead. F 1Y mountain Ford 1 year Reflecting that apprehension, the late-2023 upswing in Ford stock has been reversing a bit in the new year. But like us, Morgan Stanley sees a way higher for Ford. Analysts at Morgan Stanley described in a mid-December outlook note a bearish tilt toward the auto industry, citing the need for…
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