Ford Motor (F) confirmed on Monday what Jim Cramer has been speculating for weeks: price cuts on its electric vehicles following similar moves by Tesla (TSLA). While engaging in this price war was necessary for Ford to remain competitive and maintain customer demand, we are concerned about Club Holding’s declining profitability. Ford will lower the prices of its Mustang Mach-E, a competitor to Tesla’s Model Y crossover SUV, by an average of $4,500, depending on the model. The cuts, which range from $600 to $5,900, came just weeks after Tesla slashed prices by up to $13,000 on the Model Ys. Ford cited Tesla and federal electric vehicle incentives as reasons for its response. Lower EV sticker prices may make more models eligible for the $7,500 tax credit that is part of the Inflation Reduction Act. Depending on the models, Ford’s price cut “harms our decision to own Ford,” Jim said Monday after the automaker said the move would make some Mach-E versions unprofitable. “We’re not going to give anyone any ground,” said Marin Gjaja, chief customer officer for Ford’s electric vehicle business. “We are producing more electric vehicles to reduce customer waiting times, [and] offer competitive rates. Gjaja added that increased production and lower raw material costs could help offset the impact of price cuts. Perhaps these factors will help Ford protect some of its margins. In the past, CEO Jim Farley has said that Ford would only build electric vehicles if they were profitable. Last year, Ford announced it would split its electric vehicle and internal combustion engine units into separate businesses – called Ford Model e and Ford Blue, respectively – with the aim of increasing the efficiency of each and maximize profits. Ultimately, the former automaker and second-largest EV maker wants to produce more than 2 million EVs by the end of 2026 and eventually beat Tesla, the current price-dictator in the market. . While Ford shares fell 2.5% in afternoon trading, the stock has rebounded more than 11% in 2023 from last year’s plunge. Tesla shares also took a beating in 2022, but have gained more than 37% so far this year. F 1Y Mountain Ford (F) 1 Year Performance The Club’s View With investors concerned about pressure on margins from price cuts, we’ll be looking for messages on Ford’s next steps to address the issue. Yes, he cited production increases and lower input costs. But these alone are not enough. We originally bought Ford stock because we believed in its transformation plan to become a leader in electric vehicles while growing profits through large-scale manufacturing, shutting down unprofitable operations, and connected services and experiences. for the customers. The thesis is again put to the test. Ford, under Farley’s leadership, clearly demonstrated its ability to get out of losing companies. We’ll be looking for the CEO to use those skills to figure out how to cut costs to make the Mach-Es more profitable. Ford is expected to release its quarterly results after the bell on Thursday, along with five other Club stocks. Auto analysts expect Ford’s fourth-quarter earnings per share to be 62 cents, with total revenue up 6.9% year-on-year to 40.3 billion billion, according to Refinitiv estimates. (Jim Cramer’s Charitable Trust is long F. See here for a full stock listing.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Attendees view a Ford Mustang Mach-E GT during the opening day of the 2022 New York International Auto Show (NYIAS) in New York City on Friday, April 15, 2022.
Jeena Moon | Bloomberg | Getty Images
Ford engine (F) confirmed on Monday what Jim Cramer has been speculating for weeks: price cuts on his electric vehicles following similar moves by You’re here (TSLA). While engaging in this price war was necessary for Ford to remain competitive and maintain customer demand, we are concerned about Club Holding’s declining profitability.
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