The Real Reason Ford Stock Is Rallying—Can It Keep Going?

Key Points

• Ford is now pivoting to a new product line and assembly process that could send the stock into new highs in the coming quarters and years.
• Efficiency and affordability are at the center of this pivot, allowing Ford to avoid new tariffs on vehicles. 
• Institutional buyers see this as an opportunity to buy for the future, which they did.

The automotive sector has been subject to extra volatility recently, not only due to changing consumer spending and preferences but also from the macro backdrop involving tariffs and other developments in the sourcing of parts and imports. That being said, this is now the best time to find those companies that are actively (and successfully) adjusting.

Ford Motor Co. NYSE: F is a flagship American brand that refuses to let these pressures collapse on itself. Management has made the right decision, or so the price action suggests. The reasons behind that market reaction will be key in determining whether the stock has any more upside potential in the coming quarters and years, an opportunity for those who know what they are looking for.

These tariffs and changing geopolitics create two scenarios. 

First, some companies will have to “eat” these costs and see their margins squeezed for lower earnings per share (EPS) and valuations down the line, and a second scenario where key pivots will come in place to reposition these companies into a much brighter future ahead.

Ford has just fallen into that second category.

A Reinvention of Ford Motor

Staying true to its early legacy of commitment to efficiency and state-of-the-art assembly processes, the company has announced a $5 billion investment to revolutionize its factories and product lines, making the future of automobiles accessible to today’s consumer.

A recent press release from the company says its new line of electric vehicles will have an average MSRP of $30,000—the same as the first “universal car,” the Model T, when adjusted for inflation. This is a huge turnaround in an age when American carmakers had been dismissed, especially in the current tariff environment they operate under.

Those pressures led Ford to pivot into an unexpected area of new expertise, quoting that their new assembly process will resemble a “tree” structure, creating roughly 4,000 new American jobs and keeping the company's efficiency at its highest. It seems that the market, so far, is bullish on this idea.

Investors should note the 2.3% rally the stock earned just days after this announcement. They are willing to overlook that $5 billion will be allocated to this new project, focusing instead on the potential future benefits to Ford’s bottom-line earnings and stock valuations.

Institutions Like This New Ford

As of early August 2025, institutional buyers from the Vanguard Group justified adding 1% to their sizable holdings in Ford stock. While this may not sound like much in percentage terms, when turned into hard cash, investors can see that Vanguard now holds a stake worth $5 billion in the company.

Owning 11.6% of Ford is not something investors should take lightly. It is, in fact, a vote of confidence in the company's future financial profile and fundamental setup. Even before this shift starts, the company is already doing better than expected in a tough operating environment.

Ford’s recent quarterly earnings say it all, as the company reported 37 cents in EPS, a beat of 12% above the market’s expectations for only 33 cents, justifying the price action seen recently, if not more, in the coming quarters and years. All told, Ford stock trades at 95% of its 52-week high, but there is still a lot of upside.

New 52-week highs could be made in the future, considering that the stock’s price-to-sales (P/S) ratio is only 0.2x, effectively an inefficient price dynamic representing Ford’s past selling model. Since markets are forward-looking, it is only a matter of time before this ratio expands toward the automotive industry’s average of 6.6x.

That would be a stratospheric rise indeed, and it would be backed entirely by how the rest of the market starts to price in the new assembly and product line effects. Moreover, the fact that these new vehicles will be assembled inside the United States exempts them from the additional tariffs now in place for cars assembled overseas.

This means a direct incentive for consumers to prefer a Ford vehicle over some of the international brands, since prices are now going to become a lot more competitive in the future, also a force that is not at all being reflected in today’s valuation multiples, despite the stock’s momentum being the strongest it has been all year.