EVs, Especially From China, Could Ruin Ford Propects

Ford (NYSE: F) has had a tough year, at least according to investors. Its stock is up only 5% this year. Over the same period, the S&P 500 is 17% higher, and the shares of rival GM (NYSE: GM) have risen 30%. However, Ford’s sales have been strong, especially in the US. While GM's stock has surged, Ford has been left behind. 

One challenge Ford faces is its performance in the world’s largest car market, China. According to CNBC, Ford sales there dropped 32% from 2018 to 2022. By most accounts, they fell again last year. It is hard for a global car company to prosper without some success in China.

Ford lost a massive battle with the UAW. It will eat into profits considerably. Ford said the deal would cost $8.8 billion over the life of the new contract.

However, Ford’s biggest problem may be EVs. CEO Jim Farley recently said without success in the segment, “We Will Shink,” at least in North America.

Ford boasted that its US EV sales rose 71.8% in the first half to 44,180. However, that was only 4.2% of the total of 1,044,133. It will need to do substantially better in a market where Tesla (NASDAQ: TSLA) has a share of almost 50% and one that every major car company in the world wants to conquer.

Ford’s long-term challenge in the US is one that every significant car company faces. If Chinese EV companies can enter the market without 100% tariffs, they could badly damage the prospects of Ford and every other manufacturer pushing for large sales in America.

Jim Farley knows he has a huge challenge.

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