This Could Be Big for Ford Stock
Ford Motor Company (NYSE:F), the legendary automaker that forever changed human transportation a century ago, just made an announcement that will put the company in the history books yet again. Only this time, the company won’t be putting us in their driver’s seats.
On August 16, Ford announced that it plans to have a mass-market autonomous vehicle ready by 2021. The autonomous cars are being developed by Ford—primarily for ride-hailing or ride-sharing services—with no brakes, no steering wheel, and no driver.
“The next decade will be defined by automation of the automobile, and we see autonomous vehicles as having as significant an impact on society as Ford’s moving assembly line did 100 years ago,” said Ford’s President and Chief Executive Officer, Mark Fields. “We’re dedicated to putting on the road an autonomous vehicle that can improve safety and solve social and environmental challenges for millions of people—not just those who can afford luxury vehicles.”
Ford Speeding Ahead of the Competition
The decision will help the American car manufacturer tap into the fast-approaching $270-billion market for smart cars, joining a heated race against a number of other automobile makers. (Source: “Apple, Google, Tesla Warring Over $270 Billion Smart Car Market, Capital Market Laboratories,” Capital Market Laboratories, August 17, 2016)
Ford is joining the growing list of companies developing their own autonomous vehicles, like Tesla Motors Inc, Nissan Motor Co Ltd, Alphabet Inc, and—of course—Apple Inc, which already owns 2100 patents with the word “car” in them. (Source: Ibid)
While not as well known for its innovation as some of its competitors, Ford Motor Company—the second largest car manufacturer in the country—has been working on an autonomous vehicle for a decade. The company is doubling its workforce in Silicon Valley, as well as partnering with (or pouring money into) four startup companies to augment its autonomous vehicle development.
Ford plans on tripling its smart car test fleet this year to earn the top spot of having the largest test fleet of any automobile maker. The fleet will be comprised of around 30 self-driving “Fusion” hybrid cars being tested on the roads in different states. The fleet size is set to triple again in 2017.
What This Means for Ford Stock
For those of us who own Ford stock, the announcement could mean major upside potential when these cars finally hit the road. Imagine hailing a car to get yourself from A to B, then reading a book or taking a nap while the car does all the work—and even protects you from some human-induced driving errors. If Ford makes it to the finish line before its top industry rivals, it certainly bodes well for capital gains on our F stock investments.
The company is already doing well this year, especially after its record-breaking first-quarter sales performance. (Source: “Ford Delivers Best Quarter Ever with First Quarter Pre-Tax Profit of $3.8B; Net Income of $2.5B,” Ford Motor Company, April 28, 2016.)
Short-term gains on Ford stock are already a reality for investors, as the company also boosted its European sales by 4.5%. (Source: “Ford Market Share and Sales Volumes up In July in Europe; Ford Remains Europe’s No. 1 CV Brand,” Ford Motor Company, August 12, 2016.)
While Ford’s stock chart has been quite a roller-coaster this year to date, it is currently on the low end of a swing cycle.