Ford Motor Co. is scheduled to host an investor day on Monday, and the event comes at a “key time” for the automaker as it juggles “near-term cycle dynamics alongside the EV transition.”
That’s from analysts at Barclays, led by Dan Levy. The analysts singled out Ford’s
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plans for its EV pivot, wanting more specifics around profit margin and volume targets for Ford’s EV business, as well as the way connectivity and advanced driver assistance systems, or ADAS, will supplement EVs, they said.
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Ford has come out with ambitious targets for EVs, including an annual production pace of 600,000 electric vehicles by the end of this year, ramping up to 2 million by the end of 2026. It has also promised to make EVs half of its mix globally by 2030.
Those targets are paired with adjusted margin targets of around 8% by late 2026. Ford’s EV business lost $2.1 billion in 2022, and the automaker has said it expects another loss of $3 billion this year.
With Ford posting an EBIT margin of about 40% for the EV side last year, “the ramp to an 8% margin looks quite sharp, especially as EV pricing is expected to be a headwind,” the Barclays analyst said.
Monday’s event could be neutral for the stock, since Ford is not expected to disclose new financial targets.
It updated markets in March with its “teach-in” event, in which Ford sought to clarify the way it will be posting earnings going forward, providing numbers for its three new segments, its EV business, called Model e; the legacy gas- and diesel-powered business, or Ford Blue; and a commercial side called Ford Pro.
Beyond a possible near-term stock reaction to Monday’s event, “we hope the event provides greater color on the opportunity in Ford’s transformation ahead, as structurally we believe Ford faces the same challenges as other legacy OEMs re: cycle normalization and EV pressures,” the Barclays analysts said.
Ford needs “two clocks,” they said. To fund its “challenging” EV transition, the company needs the legacy business to generate strong margins.
“This makes Ford’s efforts in improving the earnings profile of its ICE products (Blue and most of Pro) all the more important,” the analysts said.
Ford shares have lost about 14% in the past 12 months, contrasting with gains of about 2% for the S&P 500 index.
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The underperformance has held this year, with Ford stock down 0.5% year to date vs. an advance of more than 8% for the index.
