After years of poor performance, things really started to turn around for Ford stock after CEO Jim Farley took over the company back in October 2020. Inspired by Farley’s vision of expanding the automaker’s EV lineup and connected vehicle services, Wall Street analysts raised Ford’s stock price target multiple times, while Bill Ford scooped up an additional two million shares. Ford stock reached a 20-year high last November, but in recent months, analysts have begun to question the company’s lofty goals while also expressing concerns about supply chain issues and the rising cost of raw materials. Now, Wells Fargo has gone so far as to downgrade Ford stock over these looming problems, according to Barron’s.
Wells Fargo analyst Colin Langan downgraded both Ford and General Motors stock yesterday from Buy to Sell, skipping Hold entirely in a bit of an unusual move. However, Langan noted that the recent spikes in raw materials costs for EVs may squash any hopes that EVs will soon cost the same as comparable ICE vehicles “by at least a decade.”
“Positive [battery electric vehicle, or BEV] headlines are ubiquitous, and faster BEV adoption seemed like a foregone conclusion; however, the recent raw material spike has massively changed the economics of the transition to BEV,” Langan said. He added that while he believes consumers will continue to purchase EVs, automakers will be hard-pressed to turn a profit on those vehicles due to these rising costs. The move had an immediate impact on the price of Ford stock, which was stable as recently as last week, as shares slid 4.5 percent in premarket trading to $12.25. As of this writing, the price has risen just a touch to $12.26.
Regardless, there’s no denying that Ford is facing a tough road ahead as it aims to produce millions of EVs in the coming years. As Ford Authority reported last month, EV battery costs are expected to soar by as much as 40 percent over the next two years, while at least one of the automaker’s suppliers – CATL – has already announced that it will be raising prices soon.
We’ll have more on the status of Ford’s stock soon, so be sure to subscribe to Ford Authority for ongoing Ford stock news and around-the-clock Ford news coverage.
Comments
Farley has done some great things but this over compensation of BEVs is killing Ford. Stay the course, improve what your good at, and continue to maintain stability. The Explorer is a legendary SUV but QC issues are killing it. Also Ford continues to struggle with SYNC, leaving SYNC3 in newer designed vehicles has also annoyed customers enough to leave the brand. The SYNC system whether it be SYNC2,3, or 4 has damaged Fords reliability reputation for years.
When are the big two going to realize they are walking away from half their market. Both Toyota and Indian have said that EVs will never be more than half the market. So sending half your customers to another supplier and only selling 45 grand vehicles may be the wrong idea. When are they going to tell the government to get out of their kitchen.