Why Ford should double down on hybrids as it backs off EVs

Ford Motor Co.’s decision to cut production of its electric pickup truck allows the automaker to refocus its strategy on its high-margin hybrid vehicles, which in turn should boost its underperforming stock. Ford said on Monday it would cut planned production of its all-electric F-150 Lightning pickup truck in half next year due to slowing consumer demand. The new production plan calls for the automaker’s electric vehicle plant in Dearborn, Michigan, to produce an average of about 1,600 F-150 Lightning vehicles per week, compared with the previous plan of about 3,200 vehicles per week. The announcement comes shortly after Ford decided in October to delay a previously announced $12 billion investment in electric vehicles. “We will continue to match production with customer demand,” a Ford spokesman said Monday. Ford’s transition also comes as we have been calling on Chief Executive Jim Farley to go all-out on hybrids. Jim Cramer said Tuesday that Ford’s hybrid strategy “is really paying off.” Jim believes the company should put resources into a new F-150 hybrid due to “huge demand.” “A lot of these companies are really fed up with their stocks, including Jim Farley… They don’t want to make something they can’t sell,” Jim added. According to Ford, the No. 1 and No. 2 selling hybrid vehicles in the U.S. are Ford’s F-150 and Maverick. Ford’s hybrid vehicle sales increased 75% year-on-year in November and have grown 23% since the beginning of 2023. As a result, CEO Jim Farley recently told Jim that he plans to expand the company’s hybrid vehicle lineup. But Ford stock has significantly underperformed the market in 2023, down 4.5% year to date, while the S&P 500 has gained 20% over the same period. Ford shares were up 0.8% at $11 a share on Tuesday afternoon. F YTD mountain F Stock performance so far this year. Ford’s hybrid vehicles are part of Ford’s blue division, which includes classic combustion engine vehicles and has been an important part of Ford’s overall strategy since 2004. The unit funds Ford’s investment in electric vehicles, which has cost the company a recently reported quarterly loss of $1.3 billion. Ford Blue achieved earnings before interest and taxes (EBIT) of $1.7 billion during the same period. (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. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation shall exist or arise upon your receipt of any information relating to the Investment Club. No specific results or profits are guaranteed.

A 2023 Ford F-150 Lightning electric truck is seen during the 2023 North American International Auto Show (NAIAS) in Detroit, Michigan, USA, Thursday, September 14, 2023.

Nick Antaya | Bloomberg | Getty Images

FordThe decision to cut production of its electric pickup trucks allows the automaker to refocus its strategy on its lucrative hybrids, which in turn should boost its underperforming stock.

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