I’ve got the automotive industry on my brain today.
When I ordered a new pickup truck in November, I was warned that it could take 12 weeks or more.
Luckily, there has been much to distract me from obsessing over where it is: holidays, getting COVID-19, traveling for my mom’s surprise birthday party.
Now here I am, back in my regular routine, and checking the Ford (NYSE: F) portal at least once a day for an update. And I even tried to get an update from the dealership yesterday … they were less than helpful.
But what’s really on my mind is that maybe my F-250 has been pushed back because …
- Ford is more worried about increasing the production capacity of its lineup of electric vehicles (EVs) right now.
I’ll be the first to admit, I’m not that consumer.
My primary vehicle is a carbureted motorcycle, and I ordered my F-250 with the bigger of the two V-8 engines. I’m not looking for an EV, but my opinion is not in line with what the company is seeing overall.
Last year, Ford released the Mustang Mach-E, its first EV.
- And over 27,000 units were sold in 2021. That was enough for the company to increase production of the car in 2022.
Now it expects to reach 200,000 units per year by 2023 for North America and Europe.
This success is being quickly overshadowed by the demand for the new electric version of the F-150 truck called Lightning.
The F-Series line of trucks has been the best-selling vehicle of any sort in the U.S. for the past 40 years. The F-150 specifically has been the best-selling truck for essentially its entire existence.
When Ford introduced Lightning, the company had plans to produce 40,000 units. Just a few months later, the company raised that target to 80,000. Fast-forward and …
- There were 200,000 nonbinding reservations for the truck before the company stopped taking preorders.
As of the first week of January, the company again raised that production goal to 150,000 units.
According to the company, more than 75% of reservation holders are new to the Ford brand.
The company has also partnered with Sunrun to offer at home chargers for Lightning owners. And Ford is also offering an inverter for the F-150 Lightning that can provide enough power to power a home during an outage.
I’m not going to lie, that’s pretty appealing to this Floridian … but I still need more power and towing capability out of a truck. Yet although I’m not this consumer, there clearly is demand.
- But as an investor, the EV trend has to be on my radar right now.
It’s an inevitable change in consumer spending, and there is plenty of room in the market.
When I headed on over to the Weiss Ratings website to look up Ford, I found that the company is currently rated a “C+.” Then, I clicked on the rating history to put that in perspective.
Ford hasn’t been a “Buy” since 2015. And over that time, it’s held ratings in both the “Hold” and “Sell” range, and nothing higher than a “C.”
But since the beginning of 2021, the company has been able to stay in the “Hold” range and even reach a “C+” rating a few times.
The company has already announced plans to buy back $5 billion of its junk debt, which will result in a substantial improvement in cash flow.
- I wouldn’t be surprised if Ford could see the “Buy” range again in the near future.
Which is why you can bet that I’ll be adding it to my watchlist. This way, I’ll get email notifications when the ratings changes … in either direction.
Shares of Ford are down 20% over the last seven days but up 78% over the past year. Plus, it just reinstated its quarterly dividend of 10 cents.
The company is clearly working to capitalize on the EV demand and just might be able to claim the No. 2 spot in the industry. A feat that no one has been able to accomplish … yet.
Tesla (Nasdaq: TSLA) is the current clear market leader. The company delivered around 930,000 vehicles in 2021. That number will likely be in the 2 million range by 2023.
And right now, it holds a Weiss rating of “B-.”
This is only the second time that the company has seen the “Buy” range. The first was in September 2021, but it was then downgraded a month later. Now it’s been able to hold its “B-” since Nov. 3.
Shares are only up around 4% over the past year, but 722% over the past two years.
What about other “Buy”-rated carmakers that are planning on tackling the EV market?
In 2021, Ferrari. (NYSE: RACE) unveiled its third hybrid to go into production and confirmed that it will launch its first-ever all-electric model in 2025.
The company has recently climbed up the ratings and now holds a solid “B.” Shares are up 9% over the past year and 36% over the last two years. Plus, it pays a dividend to its investors of 0.38%.
Ferrari will announce its fourth-quarter and full 2021 results on Feb. 2. I’ll have to check back and see if it will continue climbing in the ratings … and if the management mentions anymore about future EV plans.
And just this past December, Toyota Motor (NYSE: TM) announced that it was going big on battery-electric cars and revealed new concepts.
Toyota’s first electric-only model — the bZ4X — will go into production in Japan next year. And by 2030, it plans to offer 20 battery-electric models (both passenger and commercial). Lexus, which is part of the Toyota group, plans to go entirely electric by 2035.
The company is currently rated a “B-” and seems to have reached a point again where it’s in the “Buy” range more than the “Hold” range, even though it still oscillates frequently.
Shares are up 35% over the past year and 47% over the last two years. Plus, the company’s dividend is the largest yield we’ve seen today at 2.05%.
Personally, I’m going to add all these companies to my watchlist today.
Tesla may have established itself as the No. 1 player, but I want to know who’s going to take the No. 2 spot. Right now, my vote is for Ford, but it could still be anyone’s game.
And as this develops, I think there is money to be made for investors.
Best,
Kelly Green
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