Jim Cramer on Ford (F): The Cost of Playing by the Old Rules in a New Game

Edwin FosterFriday, Apr 11, 2025 2:30 pm ET
23min read
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Jim Cramer’s recent critique of

Ford Motor Company
(F) captures the existential dilemma facing traditional automakers in an era of rapid technological and regulatory upheaval. While praising Ford’s historical resilience and long-term potential, Cramer warns that adherence to outdated strategies—particularly in electric vehicle (EV) execution and cost management—could “shred” its prospects unless urgently addressed. This analysis dissects the risks and opportunities, weighing Cramer’s contrarian optimism against the headwinds reshaping the automotive landscape.

The Numbers Tell a Stark Story

Ford’s stock has fallen 30% since Cramer’s April 2024 recommendation, underscoring investor skepticism. . The decline reflects not just EV execution struggles but also broader industry pressures. Ford’s EV division posted losses of $1.4 billion in Q1 2025, with its F-150 Lightning failing to match Tesla’s Cybertruck demand. Meanwhile, legacy internal combustion engine (ICE) vehicles face declining margins as regulators push for faster electrification.

Cramer acknowledges these challenges but argues they are transitional. “Ford has survived wars, recessions, and oil shocks,” he noted in April 2025. “This is a buying opportunity, not a death sentence.” His contrarian stance is supported by GuruFocus’ GF Value model, which estimates Ford’s fair value at $12.38—41% above its April 2025 price of $8.77—based on historical multiples and anticipated operational improvements.

Analysts Split on Near-Term Prospects

The Street remains divided. While 24 analysts project a one-year average price target of $9.92 (13% upside), the consensus recommendation of “Hold” reflects caution. The disconnect stems from conflicting views on Ford’s ability to pivot. Optimists cite its $8 billion EV investment plan and partnerships with startups like Rivian, while skeptics highlight poor software integration and weak battery supply chain management.

The EV Divide: Ford vs. the Disruptors

Cramer’s criticism hinges on Ford’s perceived tardiness. Tesla’s stock, for instance, has surged 50% since Q1 2024, driven by software-driven profit margins and autonomous driving advancements. . Ford’s reliance on incremental upgrades, rather than bold bets on new platforms, risks further erosion of market share. Cramer’s April 2025 warning—that “EV struggles will haunt Ford until 2026”—highlights this structural challenge.

The AI Distractor: Why Cramer Prefers Tech Over Steel

While bullish on Ford’s long-term prospects, Cramer advocates prioritizing AI-driven stocks. A “hidden gem” AI firm he highlighted in early 2025 has returned 40% versus Ford’s -25%, underscoring his view that transformative technologies offer superior short-term returns. . The contrast reflects a broader shift: investors now demand disruptors over incumbents, even in cyclical sectors.

Policy Headwinds: Tariffs and the Cost of Protectionism

Cramer’s critique extends beyond corporate strategy. He warns that President Trump’s proposed 20% import tariffs on autos and steel could exacerbate Ford’s pain. “These tariffs will raise input costs, slow innovation, and punish consumers,” he argued, noting that 60% of Ford’s vehicles contain imported parts. Such policies risk pricing U.S. automakers out of global markets, further disadvantaging them against Asian and European rivals.

The Contrarian’s Case for Ford

Despite the risks, Cramer urges investors to “buy aggressively” at current levels. His rationale:
1. Valuation: Ford trades at 5.6x forward EV/EBITDA, below its five-year average of 7.2x.
2. Balance Sheet: $29 billion in cash and access to credit lines provide a cushion for restructuring.
3. Strategic Shifts: New CEO Kumar Galhotra’s focus on software and China’s EV market could unlock growth.

Conclusion: A Race Against Time

Ford’s future hinges on execution speed. If it can accelerate EV innovation, cut costs, and navigate policy minefields, its $12.38 GF Value target becomes achievable. However, the stakes are high: . With 45 hedge funds still holding Ford stock but shifting capital toward AI, the automaker must prove it can thrive in a world where “playing by the old rules” no longer guarantees survival.

For now, Cramer’s advice to “buy aggressively” reflects a bet on Ford’s legacy strength. Yet investors must weigh this against the harsh reality: in an era of disruption, adherence to tradition may indeed lead to being “shredded.”