Equity research report on ford motor company: running out of ´gas´?

Abstract

Despite the secular trend of electrification slowly taking over the automotive industry, almost all of Ford Motor Co’s revenues come from internal combustion engine (ICE) vehicles. Specifically, they are one of the market leaders in pick-up trucks and SUVs in the U.S. and in commercial vehicles in the E.U., and together, these 2 regions account for almost 90% of the firm’s revenue, with the rest being split developing markets such as Asia, South America, and Middle East & Africa. In this report, I will examine the current dynamics of the ICE vehicle market and how they may develop going forward, and the impact it could have on Ford and its development. The underlying theme here is that despite the increased pace at which government regulations and consequently customer preferences are evolving in its biggest markets, the alignment of Ford’s current strategy with the prevailing market conditions will ensure that its short- and medium-term performance will not suffer too much despite the increased competition posed by the electrification headwind. Also, depending on how the newly christened management plays its cards, Ford could remain reasonably competitive even in the long-term.