Market News

Ford Eyes Licensing Deal For VW’s Electric Vehicle Technology – Report

Ford Motor Co. (F) is closing in on a licensing deal for Volkswagen AG’s electric car technology. According to Bloomberg, the US automaker plans to use the technology in a second model targeting the European market.

Bloomberg reports that an agreement for the use of the Volkswagen MEB technology could be struck in the next few weeks, citing unidentified sources. The automaker is to use the technology to develop an autonomous car in Cologne, Germany, however, details of the plans are yet to be released. Bloomberg confirmed that earlier this week, Ford announced its intentions to invest $300 million to build a light commercial vehicle in Romania, including an all-electric version.

“As we have said previously, there is the potential for a second all-electric vehicle based on the MEB platform to be built at Cologne, and that is still under consideration,” said Ford Europe in a statement.

Under the stewardship of CEO Jim Farley, Ford has accelerated its electric vehicle plans in recent years. In 2018, it struck a strategic partnership with Volkswagen for the development of commercial vans. The partnership was later expanded to cover electric vehicles and self-driving technology.

As part of the push into the electric vehicle space, Ford has already announced plans to build a $185 million battery research lab. The Michigan lab is to be used to develop batteries and cells that are to power Ford’s electric vehicles. (See Ford stock analysis on TipRanks).

Following the release of 1Q 2021 financial results, Jefferies analyst Philippe Houchois reiterated a Buy rating on the stock and set a price target of $16. This implies approximately 42% upside potential to current levels.

According to the analyst, everything under the automaker’s control turned out materially better, going by another EBIT surprise of $4.8 billion.

“Management committed to structurally lower dealer inventories in future but higher work-in-progress (incl buffer stocks). Semi-conductor shortage seen as critical test to review supply chains as industry moves to electrification and battery sourcing,” Houchois stated.

Consensus among analysts on Wall Street is a Moderate Buy based on 8 Buys, 6 Holds, and 1 Sell rating. The average analyst price target of $13.40, implies 19% upside potential to current levels.

Ford scores 7 out of 10 on TipRanks’ Smart Score rating system, implying its performance is likely to align with market expectations.

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