It likely came as a blow to many when legacy automaker Ford (F) announced it would pull back on its electric vehicle (EV) aspirations. But Ford is not getting out of the market altogether and revealed why it changed its plans. That bit of transparency proved endearing to investors, and Ford shares are up over 2% in Friday afternoon’s trading.
Ford has been concerned in the past about the “big battery” problem. While many of Ford’s contemporaries think that EV systems that use giant batteries to improve a vehicle’s range can help get them on top, Ford is a lot less sure about that. Therefore, Ford is looking to smaller vehicles and hybrid models to help its push toward the greener market.
The shift in focus is not free; reports suggest the expenses, sunk costs, and write-downs will ultimately cost Ford around $1.9 billion. But Ford’s focus may ultimately pay off here as it works to push into smaller vehicles, which are, by design, more affordable than their larger counterparts due to fewer materials and fewer features.
Ford Is Adding a New Mustang
As Ford works to move into the EV market, it is also looking to keep its game strong in the gas vehicle market. In fact, it made a move recently that is catching plenty of attention. Ford is adding a new version of its Mustang to its lineup with one feature that few may have seen coming: four doors.
The four-door Mach 4 Mustang—though the name is subject to change—will feature the raw power of a Mustang—a full V8—but with four doors, making it a potentially useful car for a family. And with the competition less inclined to add a second set of doors to its muscle car lineup, that leaves a market niche largely unexploited. It may not be a mass market—niche markets are called niche for a reason—but it could be a little extra revenue in Ford’s hands at a time when every dollar counts.
What Is Ford’s Target Price?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on Ford stock based on five Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 1.92% rally in its share price over the past year, the average Ford price target of $14.20 per share implies 27.24% upside potential.
