Ford (F) needs to shake off two things weighing against its share price. It cannot rely on the paper gains
from its Rivian (RIVN) stock holding. Second are the many recalls for its hybrid, EV, and gas-powered
vehicles.
Last week, Ford said it will start offering low-cost LFP batteries in its F-150 Lightning and Mustang Mach-
E . It will depend on Contemporary Amperex Technology, a Chinese battery firm, to achieve a 2 million EV
production per year by 2026. In its last monthly production report, Ford only sold a few thousand Mach-
Es.
LFP or lithium iron phosphate batteries cost less. They have a shorter range per pound compared to the
batteries that Ford currently uses. Still, it will cost 10% to 15% less. Ford is betting that consumers will
not care about the lower range. It will also accelerate the company’s break-even operating point.
Ford already has around 70% of the battery capacity needed to meet its 2 million EV per year by 2026
target.
Ford has ambitious mass-market targets. Unfortunately, the U.S. electrical grid will not be ready to
support millions of Tesla, Ford, and other EVs on the market. In the near term, consumer disposable
income is on the decline.
Ford’s lower-priced battery option improves its EV market potential. This does not change its
profitability profile in the sector.
