Ford Chief Executive Officer Jim Farley poses next to an electric F-150 Lightning
Jeff Kowalsky/AFP via Getty Images
Ford Motor CEO Jim Farley tweeted out an ambitious goal on Thursday. No one seemed to notice.
It was, after all, a busy news day for the automotive sector. Investors should pay attention. What Farley said matters more than what the market was focused on Thursday: the mythical Apple car.
Ford (ticker: F) stock was having a fine day after the company announced a partnership with GlobalFoundries (GFS) to boost semiconductor supply in the U.S. Then came another report that Apple (AAPL) might have a car which might have self-driving capabilities by 2025 and the entire sector dropped. Apple has been working on that car since 2014.
Ford shares closed down 2%. The S&P 500 rose 0.3%. The Dow Jones Industrial Average finished down 0.2%. Apple shares rose 2.9%.
What the market seems to have missed amid all that news was Ford’s new plan to double its EV production goals for 2023.
Ford plans to manufacture 600,000 EVs annually by 2023—twice its original plan, according to Farley. That’s before Ford’s $11.4 billion investment in Kentucky and Tennessee—which will add roughly 1 million more EVs a year—comes on line.
To put that in context, 600,000 will be roughly four times as many EVs as Rivian Automotive (RIVN) likely will sell in 2023. Rivian just started shipping electric trucks recently. It will spend much of 2022 ramping up its production rate.
Rivian, of course, is valued at roughly $125 billion, based on its fully diluted share count. Ford’s market capitalization is closer to $80 billion.
Ford investors might have hoped for a bigger bounce from Farley’s tweet. But timing is everything. The tweet hit about an hour after a Bloomberg story about Apple car developments.
The bump might not have been that big anyway. Don’t forget the investors in Ford, for the most part, are value investors, the kind that scoff at Rivian’s valuation.
Ford and Farley will just have to have to wait to see Ford’s EV plans reflected in its stock price. The reaction will come when Ford is actually making those EVs.
Ford stock, currently, is trading at about 10 times estimated 2022 earnings. The S&P 500 trades for about 21 times. Tesla (TSLA), which has positive earnings, something other EV startups haven’t achieved yet, trades for about 128 times estimated 2022 earnings.
Write to Al Root at [email protected]
