here with more insight on this is lisa will an
automotive, excuse me, automotive and mobility analyst for
morning consult lisa. What side of the debate do
you fall on here? Well, in terms of
undervalued stock, I would argue that many analysts think
that the stock market in general is undervalued, not
to mention just the automotive industry in or those who
are making very strong plays toward electrification. But it
certainly was heartening to see such great sales performance from
ford in particular in june year over year sales outperformed
the industry quite drastically. And it's it's a very
positive indicator to see. Having said that one month
does not a trend make. So it will be
interesting to watch throughout the summer. I certainly think
that's fair and I think it's great context say listen
, the whole there's there's been a broader pull back
that we have seen and there's been a lot of
, you know throwing the baby out with the bathwater
, whether it be sector related or just broadly over
the entire market. I do though think back to
like the end of last year before we saw the
more dramatic pullback in the first half of this year
? And even in the context of that, it
seemed like in the greater E. V. Space
that ford was still kind of undervalued. What are
your thoughts there if we reflect back to, you
know, the last half of last year, do
you think in terms of the greater evey space that
there isn't as much valuation for afford obviously, you
know, compared to a Tesla, but when you're
thinking in terms of market growth and the legacy automaker
, the moves that it is making to grow market
share? Well, we've certainly seen some popping in
the speculative bubble for some of the purely electric manufacturers
of Late ford is certainly putting its money where its
mouth is in terms of electrification and its strategy towards
that goal. It's definitely investing billions of dollars and
broadening its lineup Very significantly. And that's very important
because morning council data tells us that 38% of consumers
say that lack of selection is a factor in considering
or not considering electric vehicles. And to your point
where you said, you know, we were seeing
that bubble in the speculative side of the E.
V. Space kind of burst. This is a
conversation that again, I was having at the latter
half of last year of, you know, you
can make an argument for a legacy automakers and when
things get tough, they have the time and duration
Also, you know, the balance sheets really to
be able to withstand tougher times and some of these
kind of newer pure play E. V. Automakers
that are just trying to get started and now what
we see is kind of a downward market and where
investors are pulling back in terms of investing on those
kind of highly speculative growth areas. Um, let's
just pivot though to the first half of this year
, where we're at right now, let's talk about
, why has ford stock kind of crashed the first
half of this year down 50/50 percent. And do
you see it rebounding off the second half kind of
on some of the newer data, albeit to your
point earlier one month doesn't make a trend? Well
, certainly Ford is experiencing what many many companies are
experiencing in terms of stock valuation in the first half
of the year. But when you look at its
strategy, there is a lot of issues. When
you look at electrification. First of all, customers
are not necessarily along for the journey. We find
that only about one in five Consumers say they plan
to purchase an electric vehicle even within the next five
years associated with that is immense, immense investment in
cost That it takes to get toward an electrification strategy
. And we, when we see manufacturers making these
really bold statements about being fully electorate within a couple
of decades, you know, Ford saying will be
5050 in terms of electric versus traditional combustion engines,
even by 2030. These are really bold statements.
And the question is, are we going to be
able to get the consumers along for that journey in
terms of demand for such a greater supply of electric
vehicles and all of that investment. Speaking of that
supply, right. We look at e V sales
, those are climbing. Even despite the shortages.
It does seem like a key metric for for a
lot of the automakers is do they have availability to
take on capacity and and can people actually get their
hands on a key and drive one of these cars
? You know off the lot in a relatively short
amount of time. Do you see ford well positioned
in this E. V. Race now with context
of this race kind of being in full swing for
the better part of the last two years, Ford
is certainly well positioned again because it's, it's worked
very hard to broaden its lineup. It's worked very
aggressively to really cover a very broad aspects of the
vehicle industry from a product perspective. So that's really
important in terms of positioning. Of course availability is
is really impacting not only electric vehicles but internal combustion
vehicles as well. And we've been experiencing that for
several, several months. The outlook is still murky
with respect to really loosening supply chain issues um,
as well on the electric vehicle side, but that
does provide opportunity when the manufacturers can overcome some of
these global supply chain issues that again do also impact
electric vehicles quite greatly. So, so that being
said, There's a part of me that wonders why
Ford doesn't trade closer to its Tesla. Now I
know there's a gap, a huge gap in market
share but you look at Tesla and you look at
market cap of over$740 billion. And then I'm
looking at Ford and the market cap is like$45
billion. That seems wider than even the market share
gap. So why does it ford garner the momentum
that is at least kind of in proportion with market
share. It seems like the road towards electrification is
a long play. It's a very long place when
a traditional manufacturers trying to leverage its wisdom and experience
and all of that muscle to get into the electric
vehicle race, it's going to take time and so
you know, as, as manufacturers like ford GM
Toyota and the light continue to electrify their fleets will
all be paying very close attention to their actions and
their progress towards these goals. And that will certainly
provide a lot of upside potential opportunity in terms of
their valuations in the future. From an investor perspective
, I do understand one point of hesitancy when you're
looking at a ford is its balance sheet and how
much debt the company has, what investments and decisions
and strategies is forward implementing to, to pay pay
down that debt. Um, you know, as
it tries to kind of continue to grow and gain
market share and do this pivot, you know,
keeping the combustion engine side of things while pivoting over
to E V. Yeah, it's been interesting the
organizational change in terms of sort of splitting the organization
into the traditional side, which is the electric side
and certainly there may be some efficiencies and streamlining that
are associated with that. It certainly makes balance sheets
more transparent and clear in terms of the, the
true investment that goes along with electrification. So that
transparency is certainly important in terms of trying to find
upside opportunities from a financial perspective, but just making
changes like that, it's, it's really all in
the execution at the end of the day, the
bottom line is the execution, I think there is
a fair enough argument and even the purpose why we're
doing this segment is I've seen a lot of,
you know, articles start to come out and a
lot of people looking at board and saying just maybe
like the broader market, it could be a little
bit undervalued. So if we're saying that potentially ford
is undervalued when you look at the tv sector,
where do you see, you know, over value
? Well, again, we've seen some popping in
that speculative bubble already, you know, towards the
back half of the year. And so there still
remains potentially speculation again, because we don't have a
good understanding of the timing and the true path towards
full electrification. We do know it's taking billions and
billions of dollars. It's an investment and we also
know that traditional combustion engine business cases are pretty thin
to begin with. So all of the investment toward
vehicle electrification, um, it really does cloud the
picture and we know that pricing for electric vehicles as
a result is rather high compared to traditional vehicles and
consumers. Um, even the consumers that are interested
in electric vehicles. Many, many consumers are just
not able to pay for those types of vehicles,
especially in the current environment with inflation. Um,
and they're like really pressing consumer pocketbooks. So a
lot of factors in play here. Um, it's
a very choppy scenario. It's interesting because, you
know, to your point there, while inflation is
, is, you know, pressuring all of us
and may, you know, make us reevaluate whether
we want to, you know, want to or
can't afford a high ticket price item, like an
electric vehicle. On the other hand, you've got
gas prices and people doing an analysis that they wouldn't
have done before and saying, hey, maybe long
term investing in an E. V. Is the
way to go again back on the flip side of
this, cause it's like a teeter here. See
, saw that goes up and down on the flip
side of this, there's a concern that we get
into a recession, even from an investor perspective growth
, there's less of an appetite to invest in kind
of growth at the moment with the markets, uh
, pulling back as much as they have so far
in the first half of this year, in terms
of fear of a recession and that continuing to grow
. How do you think that potentially impact the transition
to electric vehicles and the growth of the industry as
a whole, because that could be a huge factor
for investing in a ford or any other company in
this sector, recession could absolutely slow the growth of
electrification. We're currently seeing consumers exiting the vehicle market
in general right now just because they can't afford to
buy a new or used vehicle, especially amongst very
high prices and low selection. So if you're seeing
so many consumers really hanging onto their existing vehicles to
try to wring out extra miles and and wait it
out just in terms of traditional purchases. Absolutely.
It's gonna affect vehicle segments on the margins such as
electric vehicles. Alright. We see if we technically
some accounts, they think we're currently in a technical
recession, we'll see if that ends up being the
case and what the domino effect is beyond that,
but really appreciate your time and great insight lisa Whalen
automotive and mobility analyst from morning consult. Thanks again --> .