For years, legacy automaker Ford (F) was really only worried about other legacy automakers. The emergence of electric vehicles, though, forced Ford—and by extension CEO Jim Farley—to confront some very real truths about the market. Truths that Farley himself found “shocking.” But this confrontation is actually helping Ford significantly; Ford shares are up modestly in Tuesday afternoon’s trading.
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Farley described, in a report from Business Insider, how he was “…very humbled when we took apart the first Model 3 Tesla (TSLA) and started to take apart the Chinese vehicles.” And that was when Farley found the “shocking” components and structure contained inside those vehicles.
One thing that Ford discovered after dissecting the Tesla was that Ford’s Mach-E Mustang had a lot more wire in it than the Model 3 did. In fact, as it turned out, the Mach-E had 1.6 kilometers more electrical wiring than the Tesla did. That meant more weight, and more battery—not to mention a more expensive battery—required to move the car around. These points are vital, particularly as Ford pursues a $30,000 electric vehicle model, expected to launch in 2027.
Breaking Some Eggs
But all these developments do not come without cost. Reports note that, starting next month, Ford will begin retooling its Louisville, Kentucky factory. Previously, this factory handled Ford Escapes and Lincoln Corsairs, both of which were expected to be phased out at the end of the year.
The retooling, however, will have an all-too-human cost to go with it: the layoff of around 2,000 workers for “at least 10 months,” reports note. The good news is that they will be eligible for unemployment benefits, and will get higher-than-normal benefits for the next four months. But that still leaves a lag of six months of unemployment. Union benefits representative Jim Fisher called on union members to “…go out and get gainfully employed in the community,” which is of course easier said than done.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on two Buys, nine Holds and two Sells assigned in the past three months, as indicated by the graphic below. After an 18.56% rally in its share price over the past year, the average F price target of $12.14 per share implies 8.86% downside risk.
