Evaluating Ford (F) Stock's EV Growth Sustainability

Ford's electric vehicle momentum is accelerating sharply, outpacing the broader U.S. auto market. The company's U.S. retail sales grew 6% in 2024, nearly doubling the industry's sluggish 3% pace. A strong 17% jump in Q4 was powered by F-Series hybrid trucks, though full electrification remains uneven across its lineup.

This surge pushed electrified vehicle sales to a record 285,291 units-a 38% annual increase. The Mustang Mach-E and F-150 Lightning drove growth, lifting Ford to the No. 2 spot in the U.S. EV market. Yet Tesla still leads decisively, and Ford's EV sales remain a small fraction of total volume.

Hybrid trucks dominate Ford's electrification strategy, capturing 76% of the U.S. hybrid truck market. While this positions the company well near-term, it masks a risk: full EV adoption could render hybrids obsolete within a decade. Ford must transition hybrid buyers to battery-electric vehicles faster than competitors to protect long-term market share.

Competitive Positioning & Market Share Trends

Ford's position in the electric vehicle market has weakened significantly, exposing growing competitive pressures in a rapidly evolving industry.

In the third quarter of 2024, Ford's EV sales plummeted to just 23,509 units, resulting in a U.S. market share of 8.6%. During this period, General Motors outsold Ford by nearly a three-to-one margin, underscoring a widening competitive gap. This decline reflects Ford's loss of dominance as rivals like GM and Hyundai-Kia gained substantial ground, shifting the competitive landscape.

The expiration of federal EV incentives in September 2025 has added near-term demand pressure for Ford and other manufacturers. These incentives, which required vehicles to be placed in service by that date, have now lapsed, potentially dampening consumer purchases and slowing sales growth. The broader U.S. EV market share grew to 8.1% in 2024 from 7.3% in 2023, but this overall expansion hasn't shielded Ford from its specific setbacks.

Despite these challenges, Ford remains a key player in the EV space, though its influence has eroded amid heightened competition. The impact of incentive expiration and execution risks-such as production costs and regulatory hurdles-could prolong this downturn if not addressed.

Battery Cost Progression & Learning Curve

Ford's factory-level battery costs for electric vehicles fell 20% year-over-year to approximately $115 per kilowatt-hour (kWh) in 2024. This improvement reflects progress in scaling production and refining its supply chain, as well as efforts to integrate vertically through joint ventures with SK Innovation and CATL. According to industry data, retail replacement costs for the Ford F-150 Lightning's 100–135 kWh battery pack remain higher, ranging from $15,000 to $25,000 for parts alone and $17,000 to $28,000 including labor. The gap between factory and consumer costs highlights challenges in aftermarket services and installation overhead. If not addressed, higher replacement costs could dampen owner confidence and affect resale values.

Industry data projects battery pack prices to fall below $100/kWh by 2026, driven by learning curve effects and broader manufacturing scale. This trajectory supports long-term EV viability by lowering total ownership costs and improving competitiveness. However, achieving these targets demands significant capital investment and execution discipline, with risks tied to supply chain disruptions, raw material price volatility, and gigafactory ramp-up delays.

For investors, the outlook hinges on Ford's ability to sustain this learning curve momentum. Continued cost declines would lower vehicle prices and boost margins, but setbacks could expose vulnerabilities in its EV strategy and amplify competition from rivals with more mature supply chains. The trend is encouraging, but execution risks along the path to $100/kWh warrant ongoing scrutiny.

Growth Constraints & Strategic Uncertainties

Ford's electric vehicle momentum faces mounting headwinds despite progress. The expiration of federal EV incentives in September 2025 has already dampened near-term demand. While incentives spurred initial adoption, the loss of tax credits could slow consumer purchases as prices remain elevated, particularly for entry-level models. Industry pricing analyses suggest demand elasticity may intensify under these conditions, forcing automakers to absorb margins or aggressively discount-a tension evident in Ford's pricing adjustments for the Mustang Mach-E in select markets this year.

Competition is intensifying across key segments. General Motors now eclipses Ford in U.S. EV sales volume, with rivals leveraging broader lineups and stronger dealer incentives. Hyundai-Kia's electric offerings, particularly the Ioniq 5 and Kia EV6, have gained share through aggressive pricing and rapid charging partnerships. This competitive pressure is forcing Ford to accelerate product launches while trimming margins-a balancing act that complicates profitability targets.

Battery cost scaling remains a critical vulnerability. Though Ford's factory-level battery production costs fell 20% to $115/kWh, retail replacement costs for its F-150 Lightning battery remain stubbornly high at $15,000–$28,000 including labor. While industry projections target <$100/kWh by 2026, this assumes breakthroughs in lithium-iron-phosphate chemistry and scale. Labor costs and supply chain bottlenecks-particularly for nickel and lithium-could delay these targets, undermining Ford's value proposition for budget-conscious buyers.

The company's vertical integration strategy faces execution risks. Ford's Michigan-based battery plant has faced delays in achieving full production capacity, while partnerships with SK Innovation and LG Energy Solution face geopolitical scrutiny over foreign ownership rules. These uncertainties could disrupt Ford's cost reduction trajectory, especially if regulatory hurdles slow material sourcing from critical mineral-rich regions.

For investors, the key question is whether Ford's brand loyalty and software ecosystem can offset these structural challenges. The automaker's confidence in 2026 cost targets depends on overcoming both technical and political obstacles-a narrow path where execution gaps could erode market share gains already being challenged by rivals.

Ford's Valuation: Catalysts and Contradictions

Ford's stock currently trades below analyst consensus, reflecting both near-term optimism and deep-seated caution. The Street's average 12-month price target sits at $12.04, implying about 8% downside from the recent $13.07 level, with a wide spread from $7.00 to $15.50. This range captures divergent views on whether Ford's turnaround is sustainable. Morgan Stanley's recent $14 price target upgrade, signaling confidence in restructuring progress, stands in stark contrast to Sanford Bernstein's $7.00 cut, which worries about execution frictions and competitive pressure. The divergence underscores a key question: is Ford's momentum, including its recent EV sales growth, strong enough to justify a premium over its fundamental metrics?

The September 2025 federal EV incentive expiry remains a major near-term catalyst, creating urgency for manufacturers to maximize sales before the window closes. This deadline could accelerate demand, potentially boosting quarterly results that might reassess Ford's growth trajectory. However, Ford's valuation remains sensitive to whether the surge in EV interest translates into sustained market penetration beyond government support. Analysts like Morgan Stanley see potential in Ford's current positioning, but the significant downside targets from others suggest skepticism about the longevity of this demand spike and Ford's ability to capture it profitably.

Ford's financial health provides a buffer but doesn't fully explain the valuation gap. The company's strong balance sheet and focus on core brands offer stability, but profitability remains under pressure from intense competition and high development costs for electrification. While the recent EV sales growth is encouraging, the Street appears reluctant to fully price in this upside until sustained margins improve. The consensus fair value estimate of $11.83 further highlights the gap between current prices and the implied intrinsic worth based on fundamentals. The critical test for Ford will be whether it can maintain its sales momentum post-incentive expiry while simultaneously improving its cost structure and market share in a rapidly evolving automotive landscape.