ii view: Ford manages record EV sales in 2024

Shares in this more traditional car maker underperformed electric vehicle star Tesla in 2024. Buy, sell, or hold?

6th January 2025 11:28

Fourth-quarter and full-year US sales to 31 December

ii round-up:

Record electric vehicle (EV) sales helped auto maker Ford Motor Co (NYSE:F) detail US annual 2024 sales growth that was ahead of the industry average.

A 38% rise in EV sales year-over-year to 285,291 aided overall US retail sales growth of 6% last year, double the industry average, according to Ford. Total US vehicle sales of 2.08 million compared with 1.99 million in 2023, their highest annual gain since the pre-pandemic year of 2019.

Shares in the S&P 500 company rose 2% following the announcement having come into this latest news down by almost a fifth in 2024. That’s similar to German rivals Volkswagen AG (XETRA:VOW) and Mercedes-Benz Group AG (XETRA:MBG), and in sharp contrast to a 63% gain for EV maker Tesla Inc (NASDAQ:TSLA). The S&P itself rose 23% last year.

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Sales of 1.16 million meant Ford trucks in the US remained the biggest seller in 2024. That included 765,649 F-Series pick-ups, as well as 33,510 F-150's versus 24,165 in 2023. Tesla previously launched its Cybertruck to compete in this category.

Ford's total fourth-quarter US sales of 530,660 was an increase from 487,840 a year ago and included EV demand growth of 22% to 77,258 vehicles. Within that, hybrid sales increased 26% to 47,082, with all-electric demand up 16% to 30,176.

In late October, Ford reported net income of $0.9 billion, down $0.3 billion from a year ago. That included a $1 billion charge previously taken in relation to its electric vehicle business in order to improve profitability and capital-efficient and generate growth.

Moving into 2025, Ford had boosted its vehicle inventory to help offset the impact of expected supply reductions during plant changeovers in relation to new product launches.

Fourth-quarter and full-year results are likely to be announced early February.

ii view:

Started in 1903, Ford today employs around 170,000 people. Headquartered in Dearborn, Michigan, it operates across the three core businesses of Ford Blue, offering combustible and hybrid vehicles; Ford e, focused on electric vehicles; and Ford Pro providing commercial vehicles. Geographically, the US remains its biggest market accounting for two-thirds of sales, with Canada, the UK and Mexico other important markets contributing towards the balance.

For investors, losses at its Ford e division were previously reported, with a $1 billion charge affecting profit performance. Higher-than-forecast warranty costs previously impacted the business. High borrowing costs are likely to be hurting some buyers using finance, cost generally, and particularly for wages, are now elevated, while operational execution has by management’s own prior admission previously fallen short of requirements.

To the upside, third-quarter revenue growth of 5% to $46 billion marked the tenth consecutive quarter of growth. During 2024, the F-Series pick-up truck remained the USA’s best-selling truck for the 48th straight year. Sales of electrified vehicles are growing, while management initiatives continue to include a high focus on costs.

In all, growing sales and a forecast dividend yield in the region of 6% are attractive. That said, the current profit situation may persuade many investors to wait for signs of a clear upturn before taking an interest.

Positives

Action to restructure the business taken
Attractive dividend yield (not guaranteed)

Negatives

Previous operational challenges
Heightened costs

The average rating of stock market analysts:

Hold

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