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

Published Tue, Dec 12 20232:01 PM ESTUpdated Tue, Dec 12 20232:46 PM EST

Ford Motor 's decision to cut production of its electric pick-up allows the automaker to refocus its strategy around its highly profitable hybrid vehicles, which in turn should boost its underperforming stock. Ford said Monday it's cutting in half planned production of its all-electric F-150 Lightning pick-up truck next year due to moderating consumer demand. The new production plans call for an average volume of around 1,600 F-150 Lightnings a week, compared with previous plans to produce roughly 3,200 a week, at the automaker's electric-vehicle plant in Dearborn, Michigan. The announcement comes shortly after Ford decided to postpone $12 billion in previously announced EV investments in October. "We'll continue to match production with customer demand," a Ford spokesperson said Monday. Ford's pivot also comes as we've been calling for CEO Jim Farley to go all-in on hybrid vehicles. Ford's hybrid strategy is "really paying off," Jim Cramer said Tuesday. The company should put its resources toward the new F-150 hybrid given there is "tremendous demand," Jim argued. "A lot of these companies are really tired of where their stocks are, including Jim Farley...they don't want to make things that don't sell," Jim added. The No.1 and No. 2 selling hybrids for the automaker are Ford's F-150 and the Maverick, according to the company. Ford's November hybrid sales were up 75% year-over-year and are up 23% since the start of 2023. As a result, CEO Jim Farley recently told Jim that he plans to expand the company's hybrid-vehicle line up. But Ford stock has significantly underperformed the broader market in 2023, down 4.5% year-to-date, compared to the S & P 500 's 20% gain over the same period. Ford shares are trading 0.8% higher Tuesday afternoon, at $11 apiece. F YTD mountain F stock's year-to-date performance. Ford's hybrids — which fall under the Ford Blue division that includes classic internal-combustion-engine vehicles — have been a critical part of Ford's overall strategy since as far back as 2004. The unit has helped fund Ford's investments in EVs, which cost the company $1.3 billion in losses in its most recently reported quarter . Ford Blue delivered $1.7 billion in earnings before interest and taxes (EBIT) during the same period. (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.

A 2023 Ford F-150 Lightning electric truck during the 2023 North American International Auto Show (NAIAS) in Detroit, Michigan, US, on Thursday, Sept. 14, 2023.

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