Ford move to cut F-150 Lightning production will help optimize profitability
Ford plans to reduce production of all-electric pickup trucks and increase production of popular conventional vehicles, which will allow the automaker to earn better profits and narrow losses from electric vehicles. Ford announced on Friday that it will reduce production of its F-150 Lightning all-electric pickup truck starting April 1 due to slowing demand for electric vehicles. The automaker said the lightning layoffs were aimed at achieving “the best balance of production, sales growth and profitability.” As part of the move, the Rouge Electric Vehicle Center in Dearborn, Michigan, will move from a two-shift to a one-shift operation, affecting approximately 1,400 employees. Meanwhile, Ford said it will add 900 jobs and a third employee at its Wayne, Michigan assembly plant to increase production of its popular Bronco SUV and Ranger pickup truck – both vehicles. Conventional internal combustion engine (ICE) vehicles. In addition to these new positions, Ford said about half of the workers at the Rouge plant will be able to apply for open positions at Wayne Center. The news, which helped the automaker’s struggling stock rise 1% on Friday, provided more details on reports last month by CNBC and other outlets that Ford would cut Lightning EV production by about half in 2024. Ford’s stock price has fallen about 9% and will reach about $11 per share in 2024. Back in July, they hit a 52-week high above $15. F 1Y Mountain Ford 1 Year Ford has been moving away from electric vehicles and investing more resources in its traditional internal combustion engines and fast-growing hybrid business. Both are part of Ford’s blue division, which generates most of the company’s overall revenue. We have been supporting this strategy to leverage our strengths, especially with high-margin hybrid vehicles leading sales growth last year with sales growth of 25.3% to over 133,700 units. For the full year of 2023, sales of electric vehicles increased by 17.9% to approximately 72,600 vehicles, and sales of internal combustion engine vehicles increased by 5.5% to 1.79 million vehicles. Comparing electric car sales to hybrid sales, the F-150 Lightning was the automaker’s best-selling electric car last year, with sales rising 55% to 24,165 units. However, sales of the hybrid F-150 were more than double that, growing 41% year over year. The company has invested billions of dollars in developing electric vehicles and expects to produce 600,000 electric vehicles per year by 2024. But because Ford is cutting back on electric vehicle production, the automaker’s goal of expanding electric vehicle capacity may be delayed. This is prudent. It makes no sense for the company to force itself to hit production targets for electric vehicles when the demand for those cars, on which it doesn’t make money, isn’t there. Electric vehicles are handled by Ford’s Model e division, which lost nearly $1.1 billion in the third quarter. This is more than double the same period last year. Ford will announce fourth-quarter fiscal 2023 results on February 6. “I appreciate that because you can’t keep making trucks that don’t sell,” Jim Cramer said Friday. “But I think the F-150 Lightning is doing well.” According to the company and As part of the best-selling F Series, we believe Lightning EV sales will be more resilient in a market where overall EV demand is slowing. Investing in an electric future is an important long-term consideration for Ford, but in the current environment we’d rather see the automaker allocate capital to areas that generate positive returns and maximize cash flow. That’s where Ford’s strong lineup of internal combustion and hybrid vehicles shines. It should be noted that the slowdown in EV demand is not unique to Ford. The auto industry is facing weak demand as customers slowly adopt electric vehicles due to high maintenance costs, a lack of EV charging infrastructure and falling gasoline prices. Even electric vehicle leader Tesla has been lowering the prices of its models, putting pressure on traditional automakers to match. However, Ford is well positioned to increase hybrid production due to strong U.S. consumer demand for its F-150 and Maverick pickup truck hybrids. In fact, Maverick Hybrid sales surpassed those of the F-150 Hybrid last year, growing 67 percent to more than 52,300 units. Ford also said the Maverick Hybrid accounted for more than half of total Maverick sales last year, including the ICE version. (Jim Cramer’s Charitable Trust is Long F. For a full list of stocks, see here.) As a subscriber to Jim Cramer’s CNBC Investing Club, you’ll get Jim Cramer receives trade alerts before placing a trade. 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A Ford F-150 Lightning pickup truck is displayed at the Rouge Electric Vehicle Center on April 26, 2022 in Dearborn, Michigan.
Bill Pugliano | Getty Images
FordThe company’s plans to reduce production of all-electric pickup trucks and increase production of popular conventional vehicles will allow the automaker to earn better profits and narrow losses from electric vehicles.
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