Ford (NYSE:F) is in the news today after recalling nearly 50,000 of its Mustang Mach-E electric vehicles (EVs) and announcing that it is stopping all deliveries of the popular muscle car over a safety issue.
Ford’s stock has fallen 11% in the past five trading sessions due to market volatility and news of the massive recall of its Mach-E, one of the Detroit automaker’s signature electric vehicles. Year-to-date, F stock has declined 44%. It currently trades at $12.20 a share.
Ford has instructed its dealer network to temporarily halt all sales of its electric Mustang Mach-E crossover vehicle due to a defect that could cause the vehicle to become immobile while in motion. According to dealer notices issued by Ford, a malfunction could cause the Mach-E to not start or immediately lose power while being driven.
Ford said vehicles impacted by the recall include 2021 and 2022 Mach-Es built between May 27, 2020 and May 24, 2022. The recalled vehicles were all made at the automaker’s Cuautitlan manufacturing plant in Mexico. In all, nearly 49,000 of the roughly 100,000 Mustang Mach-Es produced during that time period are covered by the recall. The problem involves the overheating of the Mach-E’s high voltage battery caused by a malfunctioning electrically controlled switch.
Why It Matters
News of the Mach-E recall comes as Ford and other automakers struggle to launch a slate of electric vehicles and encourage consumers to adopt them. Earlier this week, several automotive executives wrote to Congress asking for further tax credits on their electric cars, trucks and SUVs to help incentivize adoption among American consumers. Currently, only about 5% of all vehicles driven in the U.S. are fully electric, according to industry figures.
Safety issues are not unique to Ford. The National Highway Traffic Safety Administration said today that Tesla’s (NASDAQ:TSLA) electric vehicles account for the most driver-assist crashes in the U.S. However, this is not Ford’s first recall related to the Mach-E. The automaker has previously issued a handful of recalls regarding the electric Mustang. One such recall involved a software error that caused unintended acceleration and problems with loose subframe bolts.
This recall is not good news for Ford or its stock. Already impacted by recent market turmoil, the Ford Mach-E recall will likely push the share price down even further. The recall could also shake consumer confidence in the entire electric vehicle sector. This comes at a critical time when automakers are trying to encourage adoption and boost sales.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.