Shares in US motor giant Ford (F) reversed today on plans to prop up its ailing German business with a $5 billion cash injection.
Attempt to get Germany Back on the Road
John Lawler, vice chair of Ford Motor Company, told the Financial Times in an interview that it would be spending $4.76 billion in an attempt to revive its Ford-Werke German arm. It is understood to have a debt of around $5.4 billion.
Although not outlining any key details, Lawler said the injection of funds would help to address the problem of overborrowing at Ford-Werke and provide cash for a multi-year business plan. Lawler said Ford will also continue strategic transformation initiatives focused on reducing costs and increasing competitiveness.
“To build a sustainable business in Europe, we also need to continue to simplify our governance, reduce costs and drive efficiencies,” he said. Lawler added that there were no plans to exit its European business. That’s despite shedding thousands of jobs last year and reducing production.
EVs Need Political Support
Europe’s car industry in general has seen a number of plant closures in recent years, battered by Chinese competition. It is also bracing for significant disruption from impending U.S. tariffs against the industry.
There are also concerns that Europe is slipping behind the U.S. and China in the development of electric vehicles. That’s not just down to innovation and sales competition but also a rolling back of EV subsidies. Doubling down on how important Ford sees its European business, Lawler called on European politicians to develop a clear agenda to promote electric vehicles and bring emissions targets in line with consumer demand. This could include lowering costs to make European EVs more competitive.
Is F a Good Stock to Buy Now?
On TipRanks F has a Hold rating based on 4 Buy, 9 Hold and 2 Sell ratings. Its highest price target is $17. F stock’s consensus price target is $10.71 implying an 8.18% upside.
