The escalating trade war between the U.S. and China is hurting automobile stocks. Ford (NYSE:F), whose weak quarterly report sent the stock lower, is an easy target. China is resuming duties on U.S. automobiles. General Motors (NYSE:GM) and Tesla (NASDAQ:TSLA) also fell due to the escalating trade war.
Ford has a number of ambitious strategies ahead to build on the company’s strength. While GM is exiting the hybrid market, Ford and Toyota (NYSE:TM) are embracing it. GM’s bet on pure EVs is risky because there is no in-between offering for consumers. Hybrids give the best of both worlds: electric power when needed and a gas-powered engine when it is needed.
In the EV space, Ford is reportedly making two more electric SUVs by 2023. The mid-sized electric crossovers will be comparable to the Ford Edge and Lincoln Nautilus in size.
In the short-term, Ford introduced a significant new Utility product line while eliminating legacy sedans. For the longer term (2020 and beyond), it will have shorter product lifecycles. Naturally, focusing on the customer experience and becoming more competitive are two key characteristics for the company.
Takeaway
Ford shares are very cheap, trading at 6.3 times forward earnings. The stock "double-topped" at $10.50 and is approaching another entry point for value investors.
Disclosure: Author owns shares of Ford.
