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What happened
Ford (F -5.79%) the stock is sinking now, and ironically it may be about the early success of the electric vehicle (EV). Ford shares were trading near the day’s lows, down 6.1% at 1:21 pm ET.
What now?
Ford ends the week on a low note, though the company did announce some big news this week. Its F-150 Lightning EV was awarded the prestigious MotorTrend Truck of the Year award for 2023 earlier in the week. But another price hike announced today risks pricing some customers out of the market.
Image source: Ford.
What now
Ford sold more than 2,000 F-150 Lightning trucks in the US in November as it ramps up production on the popular model. It still represents about one-third of its EV sales, with the Mustang Mach-E being its higher-volume EV offering so far. But Ford has ambitions for the electric version of the best-selling F-Series to ramp up quickly.
Thanks to strong demand, the company added a renovation to its manufacturing facility in Michigan, aiming to boost production to its annual capacity of 150,000 units by next fall, reports said. CNBC. But investors know the car has to be profitable, and today’s announcement about rising production costs is concerning.
Rising raw material costs were cited as one of the reasons why Ford raised the price of the entry-level model by $4,000 to just under $56,000. That’s only 8%, but when combined with previous increases, it represents a 40% increase from the original pricing of less than $40,000 in May 2021.
While rising raw material costs and price hikes are not unique to Ford, it raises questions about how the Lightning’s backlog will develop, as many buyers have ordered the truck at a lower price. Investors should monitor that metric to gauge how long demand for Ford’s valuable EV offering will last.
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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