Ford stock price held steady at its highest since 2022 after the company admitted that its electric vehicle bet had backfired. It was trading at $13.65, up by nearly 70% from its lowest level in April this year, bringing its market capitalization to over $54 billion.
Ford’s EV bet has backfired
There are signs that the massive bet on the electric vehicle industry that happened a few years ago has imploded.
In a statement in June, Audi announced that it was ditching its vision to become a pure play EV company by 2033.
Other top companies like General Motors and Porsche have made similar announcements in the past few months, a move that has helped lift their stocks.
Meanwhile, the European Commission is expected to make an announcement that will effectively reverse its plan to ban Internal Combustion Engines (ICE) from 2035, bowing to pressure from countries like Germany and Italy.
It is against this backdrop that Ford announced that it was pivoting from the electric vehicle industry and taking a $19.5 billion charge, which will be reported in its next financial report.
The company also announced that it was canceling some of its planned EV products, including the upcoming F-series truck. Its F-150 Lightning will be the a hybrid, which will use its Extended Range Electric Vehicle (EREV) technology.
While the writedown is a huge one, the market will appreciate it as the EV business has been a money pit in the past few years, losing over $5.1 billion in 2024. It also offers the company a path for its remaining EV business to become profitable by 2029.
The company also boosted its forward guidance in terms of profitability as it now expects that its profit before tax will be $7 billion, up from the previous guidance of between $6 billion and $6.5 billion. The management explained that change to its cost-cutting measures and its focus on more profitable vehicles.
At the same time, the company plans to convert some of its existing battery plants into factories for building stationary batteries whose demand is booming amid the ongoing artificial intelligence boom. Recent data shows that demand for utility-scale batteries rose by 50% in the first ten months of the year to 39.3 gigawatts.
However, converting the extra battery manufacturing to focus on the AI industry is risky as there are concerns that the bubble may burst soon. It may also take more time for the battery business to become profitable.
Ford reported strong financial results
The most recent results showed that Ford’s business did well in the third quarter, even as the management dealt with Donald Trump’s tariffs.
Its revenue rose by 9% to $50.5 billion as Americans continued to buy its trucks, with the Bronco’s segment share rising to 30%. Its other models, like the F series, Expedition, and Lincoln also continued doing well.
Wall Street analysts are optimistic that the company has more room to grow, especially now that Trump has tweaked his tariffs. The average estimate among analysts is that its revenue in the fourth quarter will be $41.13 billion, bringing the fiscal figure to $174 billion.
Ford stock price technical analysis
Ford shares | Source: TradingView
The daily timeframe chart shows that the Ford stock price has rebounded in the past few months, moving from a low of $8.22 in April to the current $13.65, its highest point in years. It has moved above the key resistance level at $13.58, its highest point on July 14.
The stock has formed a cup-and-handle pattern, which is a common bullish continuation sign. It has remained above the 50-week and 100-week Exponential Moving Averages (EMA). Also, the Relative Strength Index and the MACD have continued rising.
Therefore, the stock will likely continue rising as bulls target the next key resistance level at $15 amid the ongoing turnaround.
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