Ford became the best-performing auto industry stock last year, beating investor favorite Tesla as it doubled down on an all-electric future.
2021 was “truly a breakthrough year for Ford … easily the most important year strategically for the company since the financial crisis,” Morgan Stanley analyst Adam Jonas told CNBC.
This year saw soaring orders for the company’s Mustang Mach-3 SUV, including an order for 184 of the EVs from several New York City government agencies. The order comes in at $11.5 million, putting the price tag for the Mach-3 SUV at $62,500. Yet people are buying them like hot cakes based on order numbers.
And it’s not just the Mach-3, either. Last month, Ford had to halt reservations for the upcoming F-150 Lightning pickup truck after hitting 200,000.
“We are completely oversubscribed with our battery electric vehicles, Lightning especially,” said chief executive Jim Farley at the time. “We had to stop reservations we got so many. We stopped at 200,000, and those are orders. Hard orders.”
With interest in EVs surging, especially among investors, it’s no wonder that Ford’s share price rose by an impressive 140 percent in 2021. And that’s despite a chip shortage—and many other shortages—that is still plaguing the industry and, according to analysts, will continue to plague it into the new year as well.
According to Alix Partners, the auto industry suffered combined revenue losses of $210 billion last year because of these shortages, NBC News reported. Losses will continue this year, although chip supply is on the rise. As a result, car price tags will be higher, too.
Higher car prices would normally affect demand negatively but, according to the industry, this is not the case with EVs. GM’s Mary Barra said this year would see the tipping point for EVs, with the market exploding, not least thanks to a major boost in supply. NBC recalls that demand for EVs in the U.S. during the first half of last year doubled, even though they still represent a fraction of overall car sales.
Then there is brand recognition and loyalty. Just like Tesla has a dedicated following of people who’d rather walk than buy a car different from a Tesla, Ford has its following, too, according to an InsideEVs report. According to the report, which cited data from Experian, Ford registered more than 1,200 Mustang Mach-E crossovers in Michigan, its home state, in the first ten months of 2021. That represented a fifth of all cars registered in the state in the period.
While small in absolute terms, the number is indeed impressive—Michigan, unlike California, is not famous for its love for electric vehicles. Yet this may be changing as more models become available on the market and competition between the carmaking giants intensifies in the EV space.
Tesla is still the king of EVs in America. The company accounts for the majority of total EV sales in the country and just broke another production and delivery record last quarter. But legacy carmakers are pouring billions into EVs, and hundreds of new models are coming to the market.
“It’s no surprise that Tesla’s still dominating electric vehicle sales because they’re the only ones that really have viable products in full swing,” IHS Markit associate director Michael Fiske told CNBC.
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“In a growth market, it’s extremely challenging to maintain majority market share, regardless of industry. … As we start to move toward a larger and really significant number of manufacturers that are going to be playing in the space, Tesla has to lose share.”
It seems part of this share will be gobbled up by Ford if it stays on the course and manages to maintain an edge over competitors such as GM, which had to misfortune to have to recall all of its Bolt EVs last year because of a battery fault that heightened the risk of fires.
By Charles Kennedy for Oilprice.com
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