Ford's EV Pivot: Millionaire-Maker Potential or Market Muddle?

Ford Motor Company, once a dominant force in the American automotive industry, has been facing challenges in recent years. The company's stock price has declined by around 29% over the last decade, leading many investors to overlook it as a potential millionaire-maker. However, Ford's ambitious pivot to electric vehicles (EVs) could be a game-changer. Let's explore the pros and cons of this transition and determine if Ford has the potential to become a millionaire-maker stock.

Ford's EV strategy has been a rollercoaster ride, with its electrified business burning cash in recent quarters. The company's Model E segment, which focuses on EVs, reported an EBIT loss of $1.22 billion in the third quarter of 2024, driven by a 33% drop in sales. The flagship Mach-E crossover has faced flagging sales and price cuts, further impacting the segment's performance.

Despite these challenges, Ford's legacy internal combustion engine (ICE) business remains stable. The Ford Pro and Ford Blue Oval segments generated $1.8 billion and $1.63 billion in earnings before interest and taxes (EBIT), respectively, showcasing the company's enduring profitability in its core business.



As battery technology improves and consumer demand for EVs increases, Ford's EV business is expected to resume its longer-term growth. However, the company faces stiff competition from pure-play EV companies like Tesla and Rivian, as well as potential threats from low-cost Chinese automakers. This competitive landscape raises questions about Ford's ability to maintain market share and generate market-beating equity growth.

One concern is Ford's EV cost structure, which is complex and heavily influenced by battery production expenses. The company's pricing strategy aims to be competitive, but balancing cost reduction, innovation, and competitive pricing will be crucial for its success in the EV market.

In conclusion, Ford's ambitious pivot to EVs could significantly impact its long-term financial performance and stock valuation. While the company's ICE business remains stable, its EV transition has been challenging, and the competitive landscape is fierce. As battery technology advances and consumer demand grows, Ford's EV business is expected to resume its long-term growth. However, maintaining market share amidst intense competition from pure-play EV companies and low-cost Chinese automakers will be a significant challenge. Investors seeking stable, predictable returns may want to exercise caution when considering Ford as a potential millionaire-maker stock. Instead, they should focus on established companies with proven track records of consistent growth and enduring business models.