Categories Analysis, Industrials

Ford (F): A look at how the automaker views some of the major changes in the industry

Ford aims to produce 600,000 EVs by the end of next year and 2 million by 2026

Shares of Ford Motor Company (NYSE: F) were down 5% on Thursday. The stock has dropped 46% this year. Ford, a leader in the automobile industry, has been changing its strategy and adapting to new trends in the space. The company views electrification, software and autonomy as the three main forces that are transforming the industry. Here’s a look at some of its efforts and thoughts on these areas:

Electric vehicles

Ford is seeing significant success with its electric vehicles. In November, EV sales jumped 103% compared to last year putting Ford just behind Tesla (NASDAQ: TSLA) as the best-selling brand and manufacturer of EVs. Ford’s EV sales expanded at approx. twice the rate of the overall EV segment during the month.

The F-150 Lightning was the best-selling electric truck while the Ford E-Transit held a market share of 80% in the commercial EV industry. Mustang Mach-E sales in November rose 14.6%. Ford’s share of the EV segment expanded about 2 percentage points over last year and stood at 8.6% in November.

Ford aims to produce 600,000 EVs by the end of next year and 2 million by 2026. At an analyst event last month, the company said cost, infrastructure, and battery materials were the main bottlenecks standing in the way of EV adoption. Ford mentioned that companies that were able to build charging networks and create stable battery supply chains would be successful in this space.

Ford Motor Q3 2022 earnings infographic

Autonomy and software

During the third quarter of 2022, Ford made an important shift in its autonomous vehicle strategy. It decided to wind down its Argo AI business as it failed to attract new investors. Argo was created for the development of Level 4 advanced driver assistance systems (ADAS). Although the company remains optimistic about Level 4 autonomy, it believes there is still a long way to go before profitable, fully autonomous vehicles become a reality.

At its analyst event, Ford said that even if L4 vehicles were developed, they would be very expensive and would require maintenance. In addition, it would take time for them to be operable in all kinds of weather conditions.

Ford will instead focus on the development of L2+ and L3 systems which will provide customer benefits, fuel adoption and expand revenue and profit possibilities. The company believes there is a huge addressable market and potential for highly accretive new revenue streams tied to Level 3.

At its analyst event, Ford stated that software is the biggest change to the industry. It said software in cars today takes over some function that used to be done mechanically and this software is distributed by suppliers. The company believes that over time software will define the product for customers.

Click here to read the full transcript of Ford’s Q3 2022 earnings conference call

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