Talk about electric vehicles (EVs), and not many investors see legacy automaker Ford Motor (F) in the club just yet. You'd be stunned, however, to know how much Ford is investing in EVs and how rapidly they're selling out of them.
In fact, Ford's latest announcement reveals how big EVs could be to its growth in the coming years -- all while the company bucks the industry downturn even when it comes to traditional vehicles. It's a win-win situation for the company and a winner in the making for any investor who buys Ford stock now while it still trades cheaply.
Ford is leading the auto industry
Ford releases its sales data every month and it just came out with its May numbers. The results were so strong you simply can't afford to ignore them. That's not all: The company also just revealed plans to launch a new commercial EV. This comes just days after it started selling the F-150 Lightning pickup, an all-electric version of its F-150 pickup that's been America's best-selling truck for more than four decades.
To start, Ford's total vehicle sales in the U.S. declined about 4.5% year over year in May. For perspective, this is one of the slowest declines in its sales in recent months. Also, it's strikingly lower than the estimated 30% drop in total new vehicle sales in the U.S. in May, per auto industry forecast site MarkLines.
| Month | Percentage decline in Ford's U.S. sales (year over year) |
|---|---|
| December 2021 | 17.1% |
| January 2022 | Flat |
| February 2022 | 20.9% |
| March 2022 | 25.6% |
| April 2022 | 10.5% |
| May 2022 | 4.5% |
Data source: Ford. Table by author.
That means two things. First, Ford appears to be navigating the lingering cost and supply chain challenges well, particularly the ongoing semiconductor chip shortage that's plagued the auto industry for nearly two years now. Second, Ford is gaining market share in the U.S. auto market -- it cornered 13.5% of that market last month, up from 10% in May 2021.
So what's driving Ford's sales higher?
While its total truck and SUV sales dropped 1.4% and 4.4%, respectively, year over year, there were some notable outliers. Sales of Ford's F-Series pickups were up 6.9% year over year, and among cars, demand for its Edge and Explorer SUVs remains strong.
Yet, if not for EVs, Ford's numbers could have been a disaster. And this could just be the beginning for this automaker.
How EVs are putting Ford on the growth track
Ford's EV sales -- hold your breath -- zoomed 221.5% higher in May. The company says that's almost four times faster than the overall EV sales growth in the U.S.
Image source: Ford.
The E-Transit segment recorded its best sales month ever, and so did the Mustang Mach-E -- sales of the SUV rocketed 166% year over year. May was also the first month Ford started selling F-150 Lightning pickups, with the company saying more than 75% of its customers who have reserved the all-electric truck so far are new to Ford. That should only give investors an idea about how popular the F-150 Lightning already is, and the size of the market it can capture in the years to come. The company even stopped taking retail orders for F-150 Lightning in December after reservations exceeded expectations and crossed 200,000 units.
In fact, Ford said Thursday it'll invest $3.7 billion and add more than 6,200 new union jobs at three of its plants as it ramps up production of both gas-powered and electric vehicles. Plans include:
- An all-new commercial EV to be produced in Ohio for debut mid-decade.
- An all-new Mustang coupe and Ranger pickups to be built in Michigan.
- The scaled-up production of the F-150 Lightning in Michigan.
- Ramped-up production of Transit and E-Transit vans in Missouri.
Remember, this is just part of Ford's goal to manufacture 2 million EVs globally by 2026, by which it expects EVs to have made up one-third of its global sales vehicle volumes.
One of the most underrated EV stocks you could buy now
Ford's 2026 goal seems attainable given the kind of demand the company is already witnessing for its EVs. Triple-digit percentage growth in EV sales amid chronic supply and logistics challenges is no mean feat, and Ford has just shown how effectively it's using its experience of more than 100 years in the auto industry as the industry transforms and EVs change the way we drive.
I'd even go on to call Ford an EV growth stock now. Although most EV stocks are still commanding sky-high premiums, Ford stock is trading at a price-to-sales ratio of just 0.4. I'd be surprised if the market doesn't start bidding its stock higher in the coming months, and right now I'd pound the table on Ford and call it one of the best stocks you could buy under $20 a share.
