Is Ford a Good Long-Term Investment?
The Ford Motor Company is a company based in the United States. The company designs, manufactures, and sells automobile vehicles as well as other financial and maintenance services related to this business. The company operates under the Ford brand and makes popular companies like the Mustang and the F-150. The company was founded in 1903.
Why You Should?
- Ford is a decent reopening play in an investor’s portfolio. As people around the world become more mobile, the company will see higher demand for all of its vehicles. In addition to this, the company will also see the end of many supply chain issues, like the global semiconductor shortage. This will benefit the company and investors.
- Biden is currently looking to have a massive push forward of the electrification of vehicles made in the United States. From the building of infrastructure as well as increased federal incentives for consumers to purchase vehicles in the United States, the company continues to see help to achieve its future electric vehicle goals. This will also benefit investors.
- Ford has been investing heavily in clean power units (like a hybrid) as well as electric power units for its vehicles (like the Mustang, Bronco, and the F-150). As Ford continues to invest in what is no doubt the future of the automotive industry, it will set itself up well for the future of the industry. This makes Ford a decent long-term investment option for investors.
Why You Should Not?
- The company faces tough competition in the automotive industry. Some of these competitors include General Motors, Stellantis (owner of Fiat Chrysler), Tesla, Rivian, and many others. This competition might hurt the company and its investors in the future.
- The company faces tough competition from Tesla, a company that is miles ahead in terms of innovation in the electric vehicle industry. This delay in investments from Ford will most likely cost the company in the long-term as they struggle to find footing in this already hyper-competitive industry. I think that Tesla is a far better long-term investment option than Ford.
- The global semiconductor chip shortage has crippled some of Ford’s production around the world. The company has had to shut down its factories around the world or lower production rates due to the shortage of these critical components. Because of this, Ford has been unable to meet the sky-high demand for cars, something that has also hurt investors.
- Ford still has a lot of exposure and is mainly focusing on the development and production of vehicles that are not 100% electric. These continued investments and focuses on a part of the auto industry that will start to decrease in popularity as the demand for electric cars rise will hurt the company and its investors in the long-term.
I think that Ford is a decent long-term investment due to its position as a good reopening play, a push for electrification and green energy from Joe Biden, as well as investments in the electric vehicle space. However, tough competition, negative impacts from Tesla, as well as an ongoing global semiconductor chip shortage as well as ICE exposure might hurt the company and investors in the future.