Ford shares recorded their largest single-day gain in the past 11 months during yesterday’s stock trading action after the company revealed ambitious goals for its electric vehicle program during its scheduled Ford+ Capital Markets Day event.
The stock of the legacy automaker was propelled as much as 8.5% at $13.9 per share while closing the day near session highs. Meanwhile, 228 million Ford shares exchanged hands during the day – a number that is almost 2.5 times the average trading volume for the issue during the past 10 days. Moreover, Ford shares are trading 2.9% higher in pre-market action.
Ford’s Chief Executive, Jim Farley, announced during the conference – which was held virtually – that the company planned to ramp up its electric vehicle manufacturing capacity over the next 10 years as they aim to turn 40% of their output into all-electric units.
Meanwhile, the company plans to deploy more than $30 billion in capital to boost its efforts to develop the technology needed to power these vehicles while the head of the automaker announced that the F-150 Lighting had already received over 70,000 reservations.
The company will also increase its efforts to develop products that fulfill the productivity needs of commercial and government clients and, for that, the CEO announced the creation of a program called Ford Pro, which focuses on providing services and distribution channels to these two promising segments of the EV market.
Farley also included guidance for Ford’s financial performance for the coming years including a forecasted EBIT margin of 8% by 2023. Along with the F-150 model, Ford also expects to present an all-electric version of its flagship sports model, the Mustang, and a legacy model – the Bronco.
Among the investments that the company will be making to strengthen its pivot toward all-electric vehicles, Ford will build a compound called the Ford Ion Park – a division that will employ over 150 experts in battery development who will join forces to create sustainable solutions that power the firm’s upcoming fleet of electric vehicles in the near future.
Additionally, Ford will be forming a joint venture called BlueOvalSK alongside SK Innovation to produce battery cells that will be used in its electric-powered units. These batteries will be manufactured in the two factories operated by SK Innovation in the United States.
Ford’s ambitious goals also included an expected output of 1 million all-electric units to be produced by July 2022 – a number that exceeds Tesla’s (TSLA) current production volumes – while the firm also aims to include top-notch technological tools within its vehicles including the possibility of interacting with apps developed by companies like Apple and Amazon (AMZN) while the cars should be able to receive over-the-air software updates for their operating system.
What’s next for Ford shares?
The outlook for Ford shares is particularly promising based on the technical setup seen in the weekly chart shown above. Yesterday’s price action pushed the stock above a long-dated resistance of $13.5 per share while both the RSI and the MACD are posting their highest weekly readings of the past 10 years.
This resistance break is being accompanied by a reversal in Ford’s long-dated downtrend, possibly on the back of this pivot toward electric vehicles.
At the moment this is written, Ford’s consensus price target – as compiled by Seeking Alpha – is sitting at $13.5 per share. However, analysts could start revising their forecasts soon in response to these recent developments.
If that happens, chances are that the stock could experience significant demand from institutional investors, possibly as the EV program could be seen as a way to revive the battered bottom-line of the Detroit-based automaker by tapping this multi-trillion market.
Last year, the company generated over $24 billion in cash from operations. This number shows that Ford has enough firepower to ramp up its investments in the EV program and that is perhaps the most encouraging element of the proposition as it would not require a balance sheet expansion.