In 2021, Ford (F 0.69%) stock rose to a level not seen in the last two decades. The stock rose 136% during the year. So, what got investors suddenly excited about this old automaker, and will the momentum sustain in the new year? Let's discuss what's next for the Blue Oval.
What's driving Ford stock higher?
On the last day of 2021, Ford's stock closed at $20.77 -- a level it has not reached in at least two decades. If you would have invested $10,000 in Ford's stock at the beginning of 2021, your investment would have more than doubled to $23,630 in just a year. Ford's stock outperformed its peers General Motors, Volkswagen, and Toyota Motors last year.
F data by YCharts
There are a couple of key factors driving Ford stock higher. The first one is its upcoming all-electric pickup truck, the F-150 Lightning. Ford's F-Series trucks have been the best-selling trucks in the U.S. for 44 years. Understandably, when the company announced an all-electric version of that truck, it received an immensely positive response. Ford had to close reservations for the truck after they reached 200,000.
In response to the high demand, Ford boosted investment to increase capacity of its Rouge Electric Vehicle Center in Michigan, where the F-150 Lightning will be produced. Deliveries of the truck are expected to begin this year in spring.
But that's not the only reason behind the rally in Ford's stock. The company also reported very strong results for the third quarter. Ford reported higher sales and income compared to the second quarter. These numbers also exceeded analysts' expectations.
Ford has fared much better than its traditional rivals in terms of sourcing the needed chips for its vehicles. It recently collaborated with chipmaker GlobalFoundries (GFS 1.01%) to ensure smooth chip supply going forward. Furthermore, the company increased its operating income guidance for the full year and restarted its dividend.
Image source: Ford.
Ford's momentum continued in the fourth quarter with the company reporting solid delivery numbers for October and November. All these positive developments contributed to the stock's significant rise last year.
Is Ford stock a buy?
The big question is, after rising 136%, is Ford stock a buy right now? Ford's plans could help in answering that question.
The company has ambitious plans in the electric vehicles segment. It wants to increase its global EV production capacity to 600,000 units by 2023. For perspective, Tesla sold around 936,000 vehicles in 2021. Ford plans to invest $30 billion in electric vehicles through 2025.
Ford is also establishing three new battery plants -- two in Kentucky and one in Tennessee -- to meet its battery requirements. These plants will raise Ford's annual battery capacity in the U.S. to more than one million units. Moreover, Ford has invested in solid-state battery technology company Solid Power (SLDP -2.96%). Securing a reliable battery supply is important to ensure smooth production and keep costs low. Ford's battery plants should help it provide just that. Similarly, battery efficiency is going to be a critical factor in gaining market share in the competitive EV market. Ford's investments in the next-generation battery technology shows its intention to be at the forefront when it comes to technology.
Ford has significant expansion plans for EVs in Europe as well. It is constructing an electric vehicle plant in Germany and is converting its transmission plant at Halewood in the U.K. to produce power units for EVs in Europe.
So, clearly, Ford is doing a lot to establish itself as a leading EV maker. Like any other EV company, Ford has a lot to prove. Yet, Ford's deep manufacturing expertise and strong customer loyalty should help it more than newer EV entrants. For that reason, despite the rise, Ford's stock looks attractive.
Bear in mind, though, that Ford stock may not generate the kind of returns lately generated by top EV stocks. But at the same time, the risks involved also look much less.
