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Ford Recalls Mustang Mach-E Models to Fix Driving Issues
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Ford Recalls Mustang Mach-E Models to Fix Driving Issues

Story Highlights

While product recalls can be damaging to the brand image, Ford’s case may have a bright side as the company makes the transition to electric cars. The Mustang Mach-E cars with the defect came from Ford’s Mexican plant.

Ford (F) is recalling nearly 49,000 units of its electric car model, Mustang Mach-E. The company has already figured out how to fix the defect that caused the recall. Ford shares rose 3.3% to close at $12.20 on June 14. The stock has declined more than 40% year-to-date amid a broad selloff that has not only rattled equities but the crypto market as well

Michigan-based Ford builds a variety of vehicle types under its namesake Ford and Lincoln brands. It is among the traditional automakers, including General Motors (GM), that are battling Tesla (TSLA) for control of the lucrative electric car market.

Mustang Electric Recalled Over Safety Issue

According to a Wall Street Journal report, Ford has discovered a safety defect in some of the Mustang Mach-E cars and has instructed dealers to stop delivering the cars to customers. For cars already in customers’ hands, the owners can take them to a Ford or Lincoln dealership to get the issue fixed.

The defect in the cars relates to the power system, and it could cause several problems, such as losing power while in motion and inability to start the car. The Mustang Mach-E cars with the defect were produced by Ford at its factory in Mexico between May 2020 and May 2022. Ford made 100,000 Mustang Mach-E cars in that period and only about half of them had the problem.

Recalled Mustang Mach-E Cars to Get a Fix Soon

Ford plans to solve the safety issue in the recalled Mustang Mach-E cars with a software update, which it aims to start delivering next month. The automaker plans to deliver the update remotely, but customers have the option of taking their cars to Ford dealers to get the update, according to a CNBC report.

Wall Street’s Take

The Street is cautiously optimistic about Ford with a Moderate Buy consensus rating, based on six Buys, 10 Holds, and one Sell.  The average Ford price target of $18.63 implies 52.7% upside potential to current levels. 

Blogger Opinions

TipRanks data shows that financial blogger opinions are 88% Bullish on Ford, compared to a sector average of 68%.

Key Takeaway for Investors

Product recalls can dent customers’ confidence in a product’s quality, and Ford has had several car recalls in 2022. Indeed, the shift to electric cars may come with some teething problems for the traditional automakers, necessitating recalls.

Although potentially damaging to customer confidence, Ford’s recalls may have a bright side. The voluntary recalls may portray Ford as a company keen to deliver the best quality to its customers, and one that is ready to correct its course without waiting for regulators to point out the problem. That could help boost confidence in the brand in the electric car race. 

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