Ford (F) is having a hard time entering the electric vehicle market. Its popular Mustang Mach-E electric sport utility vehicle (SUV) has won many awards. In particular, Car and Driver gave the 2022 Mach-E a 9.5 out of 10 rating.
The Mustang Mach-E is an impressive vehicle. For example, the Environmental Protection Agency (EPA) estimates the Mach-E has a range of 211 to 305 miles on a charge of electricity. The Mach-E’s range varies because of different battery packs and motor options.
Interestingly, Car and Driver claims owners can give the Mach-E a 30-mile charge from a 120-volt outlet. Additionally, Car and Driver claims you can charge 80% of a Mach-E’s battery overnight from a 240-volt outlet.
In fact, the Mach-E is so popular that Ford’s CEO admits the company is sold out of electric vehicles, The Detroit Free Press reports. Ford CEO Jim Farley Tweeted, “we are sold out for a couple years now.”
Hence. Ford’s electrics could be as popular as Tesla’s. I think the Ukraine War and high gas prices partially explain Ford’s electric success. Ordinary people are sick of high gas prices and they want an alternative, Ford could provide.
Could Ford Dominate Electric Vehicles?
The Mach-E’s success excites investors because Ford (NYSE: F) is planning two potentially more popular electric vehicles.
First the All-Electric F-150 Lightning is the electric version of America’s most popular vehicle, the F-150 pickup truck. Second, Ford is planning an electric version of the popular Transit work vans, the E-Transit.
If the E-Transit and F-150 Lightning are as successful as the Mach-E they could become the most successful electric vehicles in America.
Will Supply Chain Problems Kill Ford’s Electric Vehicle Dream?
Yet, Mustang Mach-E sales fell by 46.5% in 2022 because of supply chain problems, Motor Biscuit notes. Mach-E is not selling because buyers cannot get them.
For instance, a shortage of semiconductor chips which run the Mach-E’s systems has shut production lines down. Notably, Ford (F) suspended and cut production at several factories because of chip shortages in February 2022.
Supplies of semiconductor chips are down because of production and transportation delays created by the COVID-19 pandemic. For an example an outbreak of the Ominicron variant is forcing a lockdown in Shenzen, China’s technology manufacturing center, on 14 March 2022, Politico reports. The Shenzhen shutdown affects Ford because semiconductor factories are closed.
Can Ford solve Supply Chain Problems?
Therefore, Ford will need to change its supply chains if it wants to enter the EV business.
Impressively, Ford (F) is planning to build a giant factory in Turkey to supply batteries for electric vans. In addition, semiconductor maker SK Siltron is planning a semiconductor factory in suburban Detroit to supply the auto industry, The Detroit Bureau reports.
Thus Ford and partners could solve the supply chain problems but it will take time. I think it will take several years for Ford to solve the semiconductor crisis.
How Much Money Does Ford Have?
Fortunately, Ford (NYSE: F) has the resources to fix its supply-chain problems.
For example, Ford had $49.593 billion in cash and short-term investments on 31 December 2022. Additionally, Ford had $257.053 billion in assets on 31 December 2022.
Hence, Ford is a cash-rich company that is making money. For instance, Ford reported $37.678 billion in quarterly revenues and a quarterly gross profit of $4.348 billion on 31 December 2021.
Ford can generate enormous amounts of cash. Impressively, Ford reported a quarterly cash flow of $7.008 billion on 30 September 2021 to $3.531 billion on 31 December 2021.
Moreover, Ford reported a quarterly ending cash flow of $22.05 billion on 31 March 2021. However, the quarterly ending cash flow fell to -$6.887 billion on 30 September 2021.
Thus, Ford can invest the enormous amounts of money necessary to build the supply chains to support electric vehicle production. In particular, Ford reported a quarterly investing cash flow of $6.669 billion on 30 June 2021.
Is Ford a Value Investment in Electric Vehicles?
I think Ford (NYSE: F) is a value investment in electric vehicles because of its low stock price and enormous amounts of cash.
For example, Mr. Market paid $16.86 for Ford on 18 March 2022. That share price rose from $13.20 on 15 March 2021. Ford shares hit a high price of $25.19 on 14 January 2022.
Thus Ford (F) is a cheap stock in a money making company with some impressive electric vehicles. Additionally, Ford stock pays a dividend. In fact, Ford has scheduled four 10₵ dividends through 1 March 2023. Dividend.com gave Ford a forward dividend of 40₵ and a forward dividend yield of 2.40% on 18 March 2022.
If you are seeking a cheap value investment in electric vehicles. I think Ford (F) is it. Ford has the resources to create impressive electric vehicles, but it also offers a cheap dividend-paying sock.
Originally published at https://marketmadhouse.com on March 18, 2022.
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