Ford (NYSE: F) Finally Looks Ready To Take On Tesla (NASDAQ: TSLA)

Just in case anyone doubted it, the 7% jump seen in Ford (NYSE: F) shares last Thursday were further proof that the automobile stalwart is back, and potentially better than ever. The stock is now up close to 300% since the lows of April 2020, with 30% tacked on in the last two weeks alone. Much of this rally has been fueled by rapidly developing plans regarding the company’s moves into the electric vehicle (EV) space. 
For investors, it’s a case of better late than never. While Ford can be forgiven for not being the actual first mover into the EV industry in the way that Tesla (NASDAQ: TSLA) was, there’s no reason they couldn’t have been the second or third. But while Tesla shares ran up 1,800% from their IPO in 2010 through 2017, Ford’s share lost 7%. That gap has only started to be eaten into over the last few months. 

Long Term Potential

Looking at how hot Ford’s shares are getting now that the company is finally getting to grips with the EV opportunity, the length of time it took Ford to just get going will probably be a source of frustration to investors for a long time yet. The good news for investors thinking about getting involved is that there probably hasn’t been a better time to own Ford stock since the mid 1990s. 

Even with the recent run, analyst Joseph Spak from RBC Capital Markets recently upgraded shares to Outperform having previously had them at Neutral. He has fresh confidence in Ford's reiterated 8% margin target for 2023 and thinks the recently announced $30 billion battery-electric investment will address some platform and scalability concerns. In addition, the company’s new all electric F-150 is likely going to be a “watershed moment” for Ford, who at a recent investor event spoke of a deep commitment to branching out into electrified models. 

They went so far as to say they expect 40% of Ford’s volume to be all-electric by 2030. Already there are more than 70,000 pre-orders already logged for the new F-150 and their E-Transit commercial vans will be on the road by the end of this year. There have been plenty of signs lately that some concrete announcements like this were coming. Earlier this month, Ford reported their US sales were up 64% on the year, but crucially their EV sales were up 260%. These double and triple digit percentage growth numbers should continue into the coming months and will only further confirm the successful pivot. 

If you missed the multi-year run that we’ve seen in Tesla’s stock or even most of this current run in Ford’s, it might feel like you’ve missed the boat completely on the EV play. But Dan Ives of Wedbush would disagree. He’s taking this new departure from Ford as proof that the industry is really “only in the first inning of a $5 trillion opportunity”, which should be reason enough for any of us with a 10+ year investment horizon to be more than happy to get involved. Outside of Ford specifically, we also have industry tailwinds from the US administration pledging to invest close to $200 billion into the EV industry as part of Biden’s $2 trillion infrastructure bill. 

Getting Involved 

Some short-term headwinds exist in the form of the global chip shortage, but this will affect all players, not just Ford. While the company warned investors earlier this month that some production targets might be impacted by the drought, it didn’t stop Tudor Pickering coming out with a Buy rating and a $17 price target. Considering shares came into May trading around the $11 mark and are currently trading hands for around $15, we can see just how much momentum they’re carrying. 

Having lagged behind Tesla for so long in recent years, it must be a nice sight for investors to see Ford outperforming them for the past six months, as they’re up 110% since September compared to Tesla’s 25%. While Tesla remains the undisputed king for the EV industry for the moment, there are more than a few challengers starting to appear. And of them, Ford is right up at the top.