We knew that legacy automaker Ford (F) and SK On had been working on a battery plant for some time now, but that particular news came one step closer to a complete reality today. A report from Reuters revealed that Ford and SK On landed a $9.63 billion loan from the United States government to build their plant, and Ford shareholders took the news badly, to say the least. Shares were down nearly 4% in Monday afternoon’s trading.
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The loan will go toward the construction of three new battery plants located in Kentucky and Tennessee. It represents the single largest loan from the Advanced Technology Vehicles Manufacturing loan program and represents a small boost from the amount Ford thought that it would land back in June 2023. Back then, Ford thought the loan would be for $9.2 billion, but I guess inflation works everywhere, even in low-cost loans for battery plant projects.
However, that also represented a noteworthy point; why did it ultimately take 18 months to approve the loan and basically leave it on President Trump’s desk just weeks before he took office? The answer, according to BlueOval SK, the name of the joint venture, was “rigorous due diligence” that required a string of company reviews. That started with financial and credit reviews and continued into technical, legal, and even regulatory reviews, among others.
Ford Looks to 2025
While it certainly sounds like Ford will have a lot on its plate in 2025, a Quartz report took a look at one Ford executive’s plans for 2025, and it included word about the “tipping point” for electric vehicles. Ford’s vice president for electric vehicle programs, Darren Palmer, noted that that tipping point would largely come from Ford itself…and its customers.
Palmer laid out a fairly simple proposition. Electric vehicles needed to be “…better to drive, cheaper to own, and easier to integrate into daily life.” Once that happened, market transitions would happen organically from there. And this is a reasonable enough point, though Palmer—being in a Michigan company—should also know about how important it is that they survive cold weather.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on four Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 10.09% loss in its share price over the past year, the average F price target of $11.04 per share implies 10.57% upside potential.
