Ford’s EV blunder reinforces decision to drop stock if no progress

By Helen Gray On Feb 15, 2023

Ford Motor (F)’s decision to halt production and shipments of its electric pickup truck further undermines our confidence in the automaker. We have little patience left for more missteps and are ready to ditch this long-held holding if there isn’t a significant turnaround this quarter. The company on Tuesday announced it had issued a stop-shipment order and pause in production last week for its electric F-150 Lightning pickup, the result of a potential battery issue. The announcement comes just a day after Ford said it plans to collaborate with Chinese supplier Contemporary Amperex Technology Co. on a new $3.5 billion battery plant for electric vehicles (EV) in Michigan — a move meant to help scale up production. Ford delivered messy fourth-quarter results just under two weeks ago that disappointed investors like us and sent shares tumbling. CEO Jim Farley said the weak earnings were a function of the automaker’s transition to a new business structure that limited production capacity, combined with poor execution. Last year, Ford announced a split of its electric vehicle and internal combustion engine vehicles into separate business units, called Ford Model e and Ford Blue, respectively. Farley told CNBC earlier this month that Ford is still working through higher-than-expected costs, a shortage of semiconductor chips and supply chain snags in order to achieve better profits at its EV division. In late January, Ford said it was cutting prices of its electric Mustang Mach-E crossover , while raising production, weeks after EV industry leader Tesla (TSLA) made a similar move. Shares of Ford slide more than 1% in afternoon trading Tuesday, to $12.94 a share. The Club take Following Ford’s fourth-quarter results on Feb. 3, Jim Cramer drew a line in the sand. “It’s inexcusable that Ford had a bad quarter,” Jim said at the time. “We will boot the stock if this quarter isn’t good,” he added. A battery problem is particularly troubling given Ford is betting its future on EVs, but can’t make the vehicles fast enough to meet consumer demand. We’ve given management one more quarter to get it right. But if Farley can’t demonstrate serious progress when the company reports first-quarter earnings, we’ll have no choice but to move on from the stock. (Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will 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 has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Ford CEO Jim Farley pats a Ford F-150 Lightning truck before announcing at a press conference that Ford Motor Company will be partnering with the world’s largest battery company, a China-based company called Contemporary Amperex Technology, to create an electric-vehicle battery plant in Marshall, Michigan, on February 13, 2023 in Romulus, Michigan.

Bill Pugliano | Getty Images News | Getty Images

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