Ford’s pivot to electric vehicles gets approval from the market

Ford is winning back some much needed investor confidence with its newly evolved stance on electrification and following the Biden administration’s $US1 trillion deal passed this week that will boost the uptake of EVs.

The Michigan-based carmaker saw stocks shoot up to more than $US20 on Monday for the first time in 20 years, giving it a market capitalisation of $US80 billion.

Analysts have not credited any particular event with price gain, but note the carmaker’s turnaround strategy that has seen it restructure staff and focus on electric vehicles as central to its stunning about-face.

Key to this has been the leadership of new CEO Jim Farley, who came to the position in late 2020. On Sunday, Farley welcomed the US infrastructure bill’s passage and reiterated Ford’s commitment to the electric vehicle revolution.

While its broader sales dropped 4%  in October,  Ford’s EV sales tripled to 14,062 units compared to the same month in 2020.

However, Ford’s electric vehicle transition clearly still has a long way to go.

It produces eight times as many vehicles a year as Tesla, but is worth just 8% of Tesla’s $US1 trillion market cap, even after Tesla’s dramatic 20 per cent price slump following Elon Musk’s Twitter musings about selling some of his stock, and after news that his brother had done just that.

According to US media, Ford’s e-Transit vans have sold out and it has also been reported that Ford has taken 160,000 revervations for its F-150 Lightning electric ute.

A Ford F-100 Eluminator concept using a $US3,900 EV crate motor released to the public last Tuesday has also proved wildly popular, when the motor sold out within days as reported by Roadshow. The automaker reported that its popularity “exceed expectations”.

To achieve its electrification ambitions, Ford raised $US2.5 billion in the US corporate bond market on Monday that it will use to fund green projects.

In a Monday filing to the SEC, the leading automaker said in the wake of Friday’s infrastructure deal that it plans to use the proceeds to fund its clean-transportation projects, including designing, developing and making a range of battery-powered vehicles.

This shows that the automaker’s debt is in high demand as it transitions to manufacture electric vehicles, a welcome change no doubt since its credit ratings were downgraded to below investment grade at the start of the Covid19 pandemic.