Ford Motor Company is making more cars and making more money but its Stock price is down. The Washington Post writes about Ford and its race to take on Silicon Valley.
Ford Motor Company on Monday replaced its chief executive, Mark Fields, with former office furniture executive Jim Hackett. The 114-year-old auto giant seeks to become a transformative company capable of taking on Silicon Valley darling Tesla and the coming revolution in smart driving.
Ford earned more than $25 billion in profits in the past four years, helped largely by the surging U.S. auto and truck market. But the auto icon is reeling from several challenges, including a stock price that has plummeted more than 30 percent.
It is telling that Ford which holds nearly 15% of the US auto market has a lower market value at $44 billion than electronic car maker Tesla at $50 billion. Tesla is not making steady profits but it is growing and investors like growth. Ford has had $25 billion in profits over the last four years but many expect the economy to turn down and car sales to fall off. In response to this situation Ford sacked its CEO. Is this what Ford needs to do to bring its stock price up?
An Electric Car Future
Many believe that virtually all cars in the future will be electric and that the companies that don’t adjust will fail. Also self-driving cars will be common and eventually the majority of vehicles on the road and likewise those companies that don’t keep up will descend into oblivion. The Guardian writes about the car industry and its electronic future.
Wholly electric cars are still a tiny minority of those on the road, but their number is growing very fast as they become more affordable and more practical. Their advantages to society are obvious: they pollute far less than internal combustion engines, and use less energy too. A city of electric cars will be cleaner and quieter than our present stinking streets. And at some stage in the next decade, their advantages to private drivers will become overwhelming. The electric car will become a mainstream status symbol and it is the buyers of internal combustion vehicles who will feel like weird outsiders.
The Guardian also speculates that private cars may largely disappear, replaced by networks of hired autonomous vehicles. These two changes will likely take place in cities, leaving the countryside as the only private vehicle, Internal Combustion car market. This is why people are bidding up the price of Tesla while Ford flounders. The new person in the driver’s seat at Ford needs to move the company toward this future, to do it rapidly and most importantly for the stock price to be seen to be doing it.
Appearance versus Reality
Ford needs to be moving into the self-driving car market, which it is doing and Ford needs to be in the electric car market and it is. Meanwhile Ford needs to sell standard internal combustion cars which it is doing. The issue for Ford is to be seen to be making the necessary moves in a timely and profitable manner in order to keep its stock price up and its investors happy. Good luck Mr. new CEO at Ford!
What Does Ford Have to Do to Bring Its Stock Price Up? PPT
