Ford Motor (NYSE:F) looks as if it is going to market its electric vehicle program seriously rather than just throw a couple more products for people to have if they want. This bodes well for Ford stock over both the short and long term.
Even if the only goal was to aggravate already-frustrated Tesla (NASDAQ:TSLA) shareholders, well played … well played.
On Thursday evening, shortly before Tesla unveiled its Model Y crossover vehicle, Ford’s official Twitter account posted a simple yet electrifying message. The three words “Hold your horses” appeared immediately below an electric blue outline of the highly-recognizable pony emblem that appears on the grill of the automaker’s Mustangs.
There was no further explanation, although that was almost certainly part of the plan. That is, let the market speculate about what all it could mean, even if the fact that an electric version of the popular muscle car is in development isn’t exactly a secret.
That buzz could be more powerful than any advertising Ford may wish to buy when it comes time to promote the car.
The EV Era and Ford Stock
It wasn’t exactly news. Ford Motor had already confirmed back in early 2017, even before CEO Jim Hackett took the helm, that a hybrid version of the Mustang was in the works and expected to be on the streets by 2020. Ditto for its popular F-150 pickup truck.
Hackett didn’t redirect that development. Indeed, he’s upped the ante, so to speak. In early 2018, just a few months following Hackett’s hiring, the automobile manufacturer announced it would offer 40 electrified vehicles (all-electric and hybrid) by 2022.
It was a decision rooted in the obvious. Aside from the fact that Tesla made EVs cool enough to copy, increasingly, combustion engines are socially as well as politically unpopular.
There’s also the not-so-small reality that eventually, the world will run out of the fossil fuels needed to power conventional vehicles. Although the date for the so-called peak oil pivot continues to be pushed down the road, that day will come sooner or later. Better to over prepare than under prepare.
To that end, Ford committed to invest $11 billion worth of capital to develop its fleet of electric vehicles. That mix will feature fewer sedan-like vehicles, and more trucks/SUVs.
If Thursday’s tweet was what it looks like it was, to the delight of Ford stock holders, the company’s going to wade waist-deep into the EV fray in style.
New Positioning and Ford Stock
The shift can’t happen soon enough, if that’s what it takes to light a fresh fire under the stock. Ford stock is trading at half of its high hit in mid-2014, and is barely off of multi-year lows reached in December.
That’s a very big ‘if,’ however.
As cool as an all-electric or hybrid Mustang may be, Ford’s revival will lie in how well it sells more conventional vehicles to consumers who are decreasingly brand loyal. Not only is General Motors Company (NYSE:GM) continuing to develop EVs, newcomers like Nio (NYSE:NIO) will eventually launch an array of battery-powered vehicles in the U.S. and abroad. It won’t be easy, because the Ford name doesn’t turn heads like it used to.
An all-electric muscle car that nods back to the best of the past can change that.
The trick? Marketing. Better marketing than most electric vehicles presently get, joined with the manufacturing of EVs consumers can actually get excited about.
While largely unprofitable in its early years and questionably profitable now, the advent of Tesla did validate one thing: consumers still respond to wants more than needs. That’s going to require a change to the way Ford as well as rival GM advertise. As Forbes contributor Ariel Cohen described it late last year, “Some analysts say that GM had hoped EVs would just go away, as illustrated by the anemic marketing campaigns for their Chevy Volt and all-electric Bolt.”
Thursday’s tweet from Ford at least suggests the company is willing to make EVs as fun and cool as they are practical, adding a long-missing ingredient to the mix.
Looking Ahead for Ford Stock
Regardless of the smart move to the inevitable future of automobiles, Ford’s paradigm shift still isn’t in and of itself a reason to step into Ford stock. It bolsters the bullish case to be sure, but it’s not a game-changer, at least not yet.
Give the company some time though. It’s started down that road, and is now having a little fun with the most-fun-but-still-affordable car in its lineup. An all-electric Mustang that can draw some of the attention away from Tesla may be the starting point for selling more practical electric vehicles to drivers not interested in going from 0 to 60 in less than five seconds.
Branding, as Tesla has proven, is as important as building a quality car.