VALUATION HIGHLIGHTS

1. Ford North America constitutes 47% of the Trefis price estimate for Ford's stock.
2. Vehicle Lease & Loans constitute 14% of the Trefis price estimate for Ford's stock.
3. Ford Europe constitutes 12% of the Trefis price estimate for Ford's stock.

WHAT HAS CHANGED?

1. Latest Earnings

Ford posted a tough set of Q4 2022 results as it missed consensus estimates and fell short of its full-year guidance, partly due to supply chain-related issues. While automotive revenue grew by 18.4% compared to $41.8 billion last year, Q4 Non-GAAP EPS stood at $0.51. In 2023, the company expects to see some pressure in average selling prices as automakers return to offering discounts. Ford has guided pretax operating profit of between $9 billion and $11 billion for the full year.

2. Ford's EV Push

Ford’s EV push is gaining steam. Its full-year electric vehicle sales hit a new high of 61,575 vehicles, making it the second-largest EV market in the U.S. driven by strong demand for the F-150 Lightning and Mustang Mach-E. Ford intends to produce over 2 million electric vehicles annually by the end of 2026, which translates to roughly a third of its global production. In September 2022, the company broke ground at the BlueOval City complex in Tennessee, which is expected to be at the heart of Ford's transition to EVs. The facility, expected to cost $5.6 billion, will be Ford's largest and most advanced auto production complex.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Ford's value that present opportunities for upside or downside to the current Trefis price estimate for Ford:

• Average Price Of Ford's Vehicles In North America: We expect steady growth in the average price of Ford's vehicles in North America as the consumer preferences shift toward the higher-end crossovers and SUVs - a favorable product mix is likely to drive average prices higher. There can be a 5% upside or downside to our price estimate if the average price moves at an accelerated pace - upward or downward.
  


• Ford's Vehicles Sold In North America: We expect a steady rise post-Covid fall in Ford's vehicles sold in North America over our forecast period. However, since this is Ford's biggest division, a substantial change in this metric can drive the company's price estimate.

BUSINESS SUMMARY

Ford Motor Company is a global automotive company headquartered in Dearborn, Michigan, USA. It manufactures and distributes automobiles across six continents. It is currently the fourth-largest automaker in the world, based on the number of vehicles sold annually. The company’s automotive brands include Ford and Lincoln. The company provides financial services, such as vehicle leases and loans, through the Ford Motor Credit Company.

SOURCES OF VALUE

F-Series Pick Up Trucks

Ford generates its maximum revenues from pick-up trucks sold in North America. The company commands a nearly 18% market share in the North American trucks segment, and this share is expected to grow steadily in the future.

Lincoln Cars

Ford's luxury cars are doing well in China, and this segment holds strong growth potential for the company.