The race for self-driving cars, autonomous vehicles and the so-called robo-taxis has gotten fierce. Despite the many advances made by tech powers like Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) subsidiary Google and Tesla Motors Inc (NASDAQ:TSLA), Ford Motor Company (NYSE:F) has no plans to get left behind.
Ford, meanwhile, has been in neutral. Looking to ignite F stock, Ford on Wednesday unveiled a list of automotive technologies to drive growth into the 21st century.
Are these technical ventures, unveiled by CEO Mark Fields just before Ford’s annual meeting, enough to convince investors to want to ride shotgun on the stock?
While Ford’s interest in these new technologies is encouraging, there’s still the question of competitiveness and sex appeal. True, Ford has driven families to work and home for more than 100 years. But in the age of Tesla, Ford is seen as lacking the brand cachet to make a dent on autonomous vehicles.
Plus, when it comes to bankrolling these types of projects, Ford will struggle to compete with Google’s deep pockets.
In that regard, Ford CEO Mark Fields told Reuters, he will not rush to match big spending by auto industry rivals. And in terms of competitiveness, Fields cautioned, “Don’t confuse activity for progress” — responding to questions about Ford’s seemingly lack of future ‘mobility’ investments relative to its peers like General Motors Company (NYSE:GM).
“Mobility” is an auto-industry way to describe the next wave of personal transportation. While it’s still related to cars, as we know it, the term also includes ride-sharing capabilities such as those provided by Uber and Lyft, as well as automated driving and parking.
In that regard, there’s also the issue of, even if Ford stock is successful at developing these new businesses in autonomous cars, will it ever lead?
Ford stock wants to get into internet-enabled services such as shuttle vans that can be hailed using a smartphone app. It’s a great idea. But Uber and Tesla are already there. What’s more, not only does Ford face an uphill battle in the U.S., the fact that Uber last month decided to sell its Chinese operations to Didi Chuxing, China’s major ride-sharing company, suggests that Ford must also compete with China.
Apple Inc. (NASDAQ:AAPL) $1 billion investment in Didi Chuxing in May means Ford also has Apple as a competitor. This means Ford, despite what Fields said in terms of capital expenses, may have to find ways to face down not only Alphabet, but also Apple … and that’s an extremely tall order.
According to Reuters, which did a study of automaker investments in future mobility, Ford has spent less than $500 million in the sector over the past five years. By comparison, Toyota Motor Corp (ADR) (NYSE:TM) has spent more than $1.1 billion, while GM and Daimler have spent $1.2 billion and $1.4 billion, respectively.
Fields has said Ford has a “contingency fund,” which it can use to fund future investments that the company thinks will fit into its long-term mobility strategy. Nonetheless, while Ford is saying all of the right things in terms of new technologies, it can’t be taken seriously if it continues to spend only fraction of what its peers have spent. And that level of underspending continues to be reflected in F stock.
The Bottom Line for Ford Stock
Ford is stuck between a rock and a hard place, and its unwillingness to take risks won’t inspire new investors to do the same with F stock.
The company appears to realize that it trails rivals in terms of autonomous vehicles. But Ford does not want to venture too quickly and too far beyond its core business.
As Fields noted, the company wants to “make sure we are investing wisely” given that less than half the prospects in the field offer real value. That’s all well and good.
Ford stock will just have to prove it’s one of those.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
