Ford Stock: Here’s Why Ford Motor Company Could Soar in 2016

Ford StockFord Stock Could Jump from Big Electric Car Plans

U.S. automaker Ford Motor Company (NYSE:F) rose and fell more than three percent in the span of 24 hours. Ford stock gained sharply on Thursday after delivering the “best” quarter in its history, thanks to soaring profits in North America and a strong revival in Europe. Net income in the first quarter nearly doubled to $2.45 billion (up 89% year-over-year) with operating margins of 9.8%, rare among auto manufacturers and a record for the company.

On Wall Street, the Ford title gained 3.77% to touch $14.18 by mid-afternoon. But just as easily, Ford stock dropped on April 29. Ford issued a recall of more than 200,000 trucks and SUVs. The vehicles may have faulty transmissions, which can suddenly shift to first gear. (Source: “Recall Roundup: Ford Vehicles, Frozen Veggies, And Organic Tea,” CBS Philly, April 29, 2016.)

Ford also announced a recall of 81,000 “Explorer” SUVs to repair a rear suspension problem.

Neither the first nor second of these problems have caused any injuries, but they have dented Ford stock’s gains. Yet, Ford stock should easily recover in the short term. Indeed, Ford stock should move higher still, as the company has made it clear that it intends to go after Tesla Motors Inc (NASDAQ:TSLA) with an electric car of its own to challenge the “Model 3” and new GM “Bolt” head-on.

Ford CEO Mark Fields said that Ford plans to offer an electric car with more than 200 miles of useful range in time to challenge Tesla’s Model 3. Ford will soon be a major player in the electric car segment, even as its traditional power vehicles are clearly a hit with customers, given the bullish tone of its latest quarterly performance numbers.

Given that this is Ford, the company that invented modern mass transportation with the “Model T” more than 100 years ago, Fields’s predictions carry weight. Not by chance, drawing on the Model T’s success, Ford will baptize its electric car the “Model E.”

There aren’t any details about the “Model E” yet, but this is Ford’s first major project to build an entirely new 100% electric car produced in a large series. The automaker has so far offered hybrid vehicles, such as the Ford “Focus,” which also has an all-electric version. However, the Focus Electric is an electrified model, meaning it was not designed from scratch as an electric vehicle.

Ford said it will launch the Model E by 2019, selling it at a price of $35,000 or less. (Source: “Model E: Now Ford plans a 200-mile electric vehicle,” ExtremeTech, April 29, 2016.) Ford has recently registered the name Model E in the office of patents and trademarks in the United States and elsewhere. (Source: “If Ford Did Not Block Trademark For Model E, Tesla Would Have Completed A Word After Model S, Model X,” Tech Times, April 11, 2016.)

Ford had already filed the trademark “Model E” in the early 2000s, when Tesla Motors wasn’t even a figment of Elon Musk’s fertile imagination. Ford’s goal is to prevent Tesla and GM from monopolizing the electric car segment between themselves, managing to win over consumers in major U.S. cities.

Ford has picked the ideal timing to unveil the Model E. Most industry analysts expect Tesla Motors to start delivering the Model 3 no sooner than the end of 2017 or early 2018 in the most optimistic of cases. Given its history with the Model X, 2019 deliveries are more likely.

Ford is resurging as a manufacturer of traditional power vehicles, setting new records. As news of the Detroit giant’s electric car developments continues to break, Ford stock should get a strong boost as well.