For the automobile industry, 2021 is very extraordinary, on the one hand, the new crown epidemic and chip shortage have seriously affected the industry's production capacity and output; on the other hand, under the impetus of many favorable policies, the public's recognition of new energy vehicles is getting higher and higher, new energy vehicles have entered a new stage of explosive growth, and new energy vehicle listed companies have also attracted considerable attention in the capital market.
And how the traditional car companies have become seems to have no one paid attention to, the recent rise in the stock price of the veteran car company Ford by 140%, what is behind what happened?
Ford in the trough
According to statistics, among the 77 listed automotive companies in 2021, 49 listed companies have increased their market value. Among them, Tesla's market value exceeded $1 trillion, constantly widening the gap with Toyota, the second in the industry, and sitting firmly on the throne of the world's highest market capitalization car company. At the same time, Tesla became the fifth public company in the United States after Apple, Amazon, Microsoft and Google to have a market capitalization of more than a trillion US dollars, setting a record for the automotive industry.
In terms of growth, Tesla's performance is not the best in the industry. To the surprise of most people, the "century-old store" Ford Motor has overpowered many new energy vehicle companies, and has become the best performing automobile stock in 2021 with a stock price increase of 136%.
Morgan Stanley commented: "This is indeed a breakthrough year for Ford, probably the company's most strategically important year since the financial crisis. ”
This outstanding achievement has not been easy to come by. In March 2020, in the context of the US stock meltdown, Ford Motor fell into the lowest trough of recent years.
Around the same time, In a paperwork filed with the SEC, Ford indirectly disclosed that Jim Farley, who had just been promoted to chief operating officer, would become the company's next CEO.
Jim Farley joined Ford in 2007 as the company's global head of marketing and sales. Since then, Farley has served as head of Ford's premium brand Lincoln, head of business in Europe/South America, and head of emerging business, technology and strategy teams.
In August 2020, after failing to satisfy Wall Street and investors with a $11 billion restructuring plan, Ford abruptly announced the retirement of CEO and president Jim Hackett on October 1, with Jim Farley taking office.
Bill Ford, executive chairman of Ford Motor Company and great-grandson of founder Henry Ford, thanked Han Kate for his contribution to the company's modernization and transformation, saying, "These transformations he has led will enable us to win in the competitions of the future." ”
Since taking office in 2018, Han has phased out Ford's sedan business in favor of more profitable pickups and SUVs; formed alliances with Volkswagen, Mahindra, and Rivian to deepen collaboration on electrification platforms, commercial vehicles, and pickups; and developed and implemented a "Co-create Tomorrow" plan to build Ford into a high-growth, high-profit company.
Mr. Han's efforts didn't pay off quickly, and during his three-year tenure, Ford's profits fell year after year, with its stock price falling more than 30 percent. At the time of the change, Ford's market capitalization was only $26.6 billion.
Bill Ford had high hopes for Jim Farley, praising him for having an innate affection for cars and customers, and for having a good intuition about the future of the automotive industry and the new technologies that could change the industry.
The verbal praise is false, and the difficulties Faced by Farley are real: the first two leaders were "fired" for three years in office, and if they could not lead the company out of the trough, the end was obvious.
However, Farley quickly proved his ability with a good financial report.
In the first quarter of 2021, Ford's net profit reached $3.3 billion, the highest since 2011, and adjusted EBITDA jumped to $4.8 billion.
A good start is half the battle. For more than a year, Ford's performance in the capital markets has been overwhelming, with a market capitalization of $94.5 billion as of the close of trading on January 5. It quadrupled faster than when "changing the coach".
Ford staged the stubbornness of the veteran car company?
With a strong counterattack staged in more than a year, what is the magic of Jim Farley?
Farley came from a family of automobiles, and his grandfather was a Ford employee. In 1990, Farley received an MBA from UCLA and joined Toyota.
Farley was a great marketer, and in the United States, which liked high-powered, big cars, he helped Toyota stabilize its low-fuel and small stations.
In 2002, Toyota launched a new brand, Sciion, in North America. Aiming for Generation Y youth, Farley brought the unremarkable Sciion to campus, and sales climbed from zero to 100,000 units a year.
This achievement attracted the attention of Bill Ford. At the recommendation of a friend, he personally went into battle to persuade Farley to jump ship.
Farley recalls that he was eventually persuaded to be "impulsive like a child" and "lured" by Bill Ford to Ford.
At Ford, Farley is a "fire captain" who is constantly being assigned to the precarious business sector as the head of the situation and constantly salvages the situation. Stepping into the CEO position, the burden on Farley's shoulders is heavier.
As CEO, Farley announced core business objectives and organizational changes at an online conference attended by all employees of the company. While Ford is the banner of the U.S. auto industry with a history of nearly 120 years, In the face of the upheavals in the automotive industry, Farley defines the company as a "challenger." "We are now participating as a challenger in the global marketplace, with a focus on investing in high-growth, high-return business opportunities."
Farley proposed that the company will continue to achieve an EBIT of 8% and maintain sufficient cash flow in the automotive business to ensure that it can continue to invest in the future and achieve business growth.
Some Ford executives said that there is a strong sense of urgency about welfare, and he is well aware that the company must act quickly at this time, without further ado, and focus on achieving results. In the face of a strong Tesla, Farley is always thinking about how to make Ford the second place in the field of electric vehicles in the United States.
Since taking office, Farley has released its Ford+ development plan focused on commercial vehicles, software and electrification.
Plans include: $30 billion in electrification investment by 2025; a joint venture with SK Innovation to produce electric vehicle batteries; Doug Field from Apple as chief advanced technology and embedded systems officer; a partnership with Redwood Materials to build a closed-loop recycling system for power batteries; and the establishment of the Ford Pro Commercial Vehicle business unit.
Unlike Tesla, many of Ford's users in the U.S. market come from vast farms, and electric pickups are its key products.
A reporter once asked Farley that without a large-displacement engine, can Mustang still be called a "soulful" Mustang? Farley affirmatively said: "In the future, electric vehicles will be a product with emotional factors. We let it bring a strong emotional element, it will have a very pleasant driving experience, and it will have high technology and zero emissions. ”
Farley's rapid efforts have allowed Ford to achieve significant results in the recent past, and its share of the US electric vehicle market has increased from 5.4% in 2020 to 10% in 2021.
Despite chip challenges, Ford's fiscal third quarter 2021 reached $35.7 billion in revenue and adjusted EBITDA of $3 billion. Farley likes to use baseball grammatical examples. At the third-quarter earnings report, he said that the automotive industry is in the "opening game" of electrification, Ford is "going all out" with new products and services, and the E-Transit electric van that will start producing in 2021 and the F-150 lightning pickup truck that will go to the market in the spring of 2022 are the "key batting opportunities" that Ford has.
Farley proposed that Ford will increase its electric vehicle production capacity to 600,000 units per year by 2023. He said Wall Street's pursuit of Ford's recent performance comes from having a clear plan for the company's current development, "everyone knows what it is."
Can Ford overtake Tesla?
Tesla is naturally Ford's most concerned "friend".
In April 2021, several car accidents sparked public doubts about the use of Tesla's self-driving technology, and Jim Farley took the opportunity to add fire, saying on social media: "BlueCurise! We tested it in the real world so that our customers didn't have to. The rhetoric satirizes Tesla as a guinea pig that treats users as experiments.
Of course, Farley is also aware of Tesla's current strengths.
In an interview with the media, Jim Farley expressed his recognition of the industry leader Tesla, declaring that Musk is a role model, on the other hand, he also showed Ford's ambitions: "The second place is the number one loser, so we have to fight to be the first." ”
Farley reportedly analyzed the reasons for Tesla's success several times at Ford's internal meetings and distilled three main points. First, Tesla uses a direct sales model, and Ford has been trapped by dealers manipulating prices for many years, and dealers will even sell for more than $15,000 more than Ford's suggested retail price. Second, Tesla is very professional in electric drivetrains, and no one in the industry has been able to catch up in this regard. Third, simplicity allows Tesla to quickly ramp up production at a lower cost.
Criticism is criticism, and the advantages of industry bosses must naturally be learned. In October 2021, Ford released a new FordSelect premium smart electric vehicle brand in the Chinese market. With the domestic production of Mustang Mach-E, Ford is also stepping up to build a direct sales network for electric vehicles, and has opened 13 urban exhibition halls in Beijing, Shanghai and other places, and plans to exceed 100 in the next five years.
In the U.S. market, starting from the current actual situation, Ford's focus is on competing with GM. At the close of U.S. stocks on December 28, 2021, Ford's market capitalization of $83 billion was slightly higher than GM's $82.9 billion, surpassing competitors in market capitalization for the first time in more than five years.
Morgan Stanley predicts that Ford will sell 150,000 electric vehicles in fiscal 2022, while GM electric vehicle sales will reach 114,000. But GM will regain its dominance in the next few years. In addition, Rivian, known as the "Tesla Killer", is also eyeing the field of electric pickup trucks.
For Jim Farley, the dreamy year of 2021 is a thing of the past, and there is still a long way to go before we can take Ford to restore our former glory.