Ford (F) has announced a milestone at its Ford Otosan joint venture in Turkey, with the start of production of all-electric transit vans. Founded in 1903, Ford is one of the world’s largest automakers, along with General Motors (GM) and Toyota (TM).
The fully electric Transit model is called the E-Transit, and the Ford Otosan factory, located in the Turkish province of Kocaeli, will produce the models for the European market.
Ford Otosan is a joint venture between Ford and Koc Holding. A €2 billion investment has been earmarked toward expanding Ford Otosan’s factory capacity. Ford also plans to produce electric vehicle batteries at the factory.
Ford Otosan’s General Manager, Güven Özyurt, said, “Production of E-Transit in our Kocaeli plant, where the electricity is supplied with 100% renewable energy, is a source of pride for us and another turning point in our increasing role in Ford’s electrification strategy.”
Ford Leans on Transit Brand in Europe
A stiff competition is brewing in Europe’s electric vehicle market. Recently, Tesla (TSLA) inaugurated its European manufacturing hub in Berlin, Germany. China’s Nio (NIO) is also making inroads in Europe as it looks to not only sell cars but also license its battery-swapping technology. Meanwhile, General Motors and other automakers also have their sights on the European electric vehicle market.
Ford hopes the E-Transit will give it an advantage in the competition. It says that its Transit model has been the world’s best-selling cargo van. Ford had received more than 5,000 orders for the E-Transit even before the vehicles rolled off the assembly line. The company targets the fleet operator market.
Wall Street’s Take
On April 6, Bank of America Securities analyst John Murphy reiterated a Buy rating on Ford and raised the price target from $30 to $32, which indicates 113.9% upside potential. The analyst commented that while sales volumes may be low, Ford’s profitability per unit is high and earnings are expected to increase in 2022 compared to the previous year.
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on six Buys, seven Holds, and two Sells. The average Ford price target of $21.60 implies 42.67% upside potential to current levels. Shares have increased 21% over the past year.
TipRanks data shows that financial blogger opinions are 87% Bullish on Ford, compared to a sector average of 69%.
The Takeaway for Investors
Ford’s milestone in Turkey is important for its efforts to grow its share of the European electric vehicle market. Additionally, the capacity expansion at the Ford Otosan factory to produce more electric vehicles should contribute toward reducing Ford’s carbon footprint, which the automaker has made a priority goal.
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