Ford Motor Company (NYSE: F) is making bold moves to solidify its presence in the electric vehicle (EV) market while addressing challenges in its European operations. With a forward price-to-earnings (P/E) ratio of 7.63, Ford is considered one of the most undervalued EV stocks among hedge funds. The company’s strategic cost reductions, continued investments in battery technology, and restructuring efforts in Germany highlight its commitment to long-term growth.
Ford’s $4.76 Billion Investment in German Operations
Ford has announced plans to inject up to €4.4 billion ($4.76 billion) into its struggling German subsidiary, Ford-Werke, to alleviate debt and support its European business transformation. The capital infusion aims to revitalize operations and strengthen Ford’s ability to compete in the region, where it faces stiff competition from Chinese automakers and regulatory challenges.
John Lawler, vice chair of Ford Motor Company, emphasized the importance of this move, stating, “By recapitalizing our German operations, we are supporting the transformation of our business in Europe and strengthening our ability to compete with a fresh product portfolio.” The investment aligns with Ford’s broader restructuring strategy, which includes workforce reductions across Europe. Approximately 4,000 job cuts are expected, with most occurring in Germany.
Ford’s Model e Division Navigates Financial Challenges
Ford’s Model e division, dedicated to EV development, achieved $1.4 billion in cost reductions in 2024 despite industry-wide pricing pressures and increased investment in battery plants. However, the division’s revenue declined by 35% year-over-year, reflecting the competitive pricing landscape in the EV sector.
Looking ahead, Ford anticipates Model e losses of $5 billion to $5.5 billion in 2025 due to continued pricing challenges and ongoing investments in next-generation battery technology. Despite these short-term setbacks, Ford remains committed to its electrification strategy, with new EV models slated for launch within the next two years.
Ford’s Global EV Expansion and Strategic Investments
As part of its global electrification strategy, Ford is expanding its EV footprint in Europe and beyond. The company’s BOSK battery joint venture, set to launch later in 2025, is expected to generate significant cost savings through production tax credits. Additionally, Ford completed 9 million over-the-air updates in Q4 2024, with 80% addressing customer and warranty issues, enhancing overall vehicle reliability.
The EV market continues to experience rapid growth, with a valuation of approximately $1.32 trillion in 2024 and a projected compound annual growth rate (CAGR) of 32.5% from 2025 to 2030, according to Grand View Research. Ford’s strategic positioning within this expanding market, combined with its cost-cutting initiatives and new product launches, underscores its long-term growth potential.
Ford’s Stock Among the Most Undervalued in the EV Sector
Ford’s stock remains a top pick for value investors, with a forward P/E ratio of 7.63, significantly lower than many EV competitors. Hedge funds recognize Ford’s potential, with 45 hedge funds currently holding positions in the company, making it the third most undervalued EV stock in the sector.
While short-term financial challenges persist, Ford’s strategic investments, cost-saving measures, and European restructuring efforts position it as a formidable player in the evolving EV landscape.
