Ford Motor Company (NYSE:F) has rewarded patient shareholders with a strong start to 2019. The company also has demonstrated its willingness to make necessary changes to stay at the forefront of innovation. As a result, Ford stock looks like it has even better days ahead.
From recent shuffling in management to half a billion-dollar partnerships with electric vehicle makers, Ford is showing investors that they won’t be caught flat footed in an industry that is extremely competitive.
Last year may have left investors feeling nauseous as Ford stock felt like a falling knife. Shares peaked at over $12 in the middle of the year but by the end of the year, the stock had been cut almost in half.
The good news is that 2019 paints a very different picture. Multiple changes are afoot, and the market has been responding positively. Ford stock is up over 10 percent in the last month alone fueled by a strategic shift and major product launches.
Big Changes at Ford
One of the many changes at Ford has been personnel. An important change at the top involves Jim Farley being appointed the president of New Businesses, Technology & Strategy. His ascendance is important to note as it signals a recognition of the necessity of key people with artificial intelligence and big data experience. Farley will help drive strategy and operations in an approach rooted in analytics.
A renewed emphasis on strategy and analytics will help “transform Ford to succeed in an era of profound change and disruption.”
The leadership changes may seem superficial, but they have had far reaching impact on the way Ford runs its business. The company used to rely on traditional customer research, make decisions in a predictably hierarchical and formal way, and subsidize underperforming product lines.
Well, no more.
It’s a new era for Ford. They have embraced their customers and centered design around deep customer insights. They are streamlined the decision-making processes. They are making shrewd choices on product lines—betting on their winners and culling their losers.
The result is that Ford stock is looking like it is about to put the pedal to the metal. This is the year for Ford to execute on its strategic plan.
The Electric Future and Ford Stock
Despite their leadership in traditional gasoline-powered trucks and SUVs, Ford knows that the future is green. So far, Ford’s foray into the world of electric vehicles has been less than impressive. The electric Ford Focus isn’t much to look at, leaving the automaker with a big hole in its future product line.
Cue the $500 million investment in Rivian, a private electric vehicle maker with the technology that could help Ford dominate vehicle categories in electric that it is accustomed to leading in traditional vehicles.
Ford already has the industry relationships, including well-established sales and distribution channels. What they don’t have is a marketable electric product.
This minority investment should change that.
Barring any regulatory approval issues, Ford will be able to leverage Rivian’s flexible skateboard platform to build all-new battery electric vehicle.
Rivian has developed two clean-sheet vehicles (five passenger R1T pickup and seven-passenger R1S SUV) that are well-designed and address consumer concerns of mileage (400 miles per charge). They also look like they would mesh well with Ford’s existing lineup.
Sustainability is the future, and through this investment, Ford has a real chance at becoming a leader in EV. The future is clean and bright.
As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.