Ford Motor (F) is readying a "big move" into all-electric vehicles, with its existing Volkswagen (VWAGY) alliance set to expand next week, Morgan Stanley said. Ford stock was flat.
While it's investing $11 billion in electric-vehicle technology, Ford has focused thus far on hybrid cars vs. all-electric cars. That's about to change, according to Morgan Stanley analyst Adam Jonas.
"While Ford and VW have yet to announce any definitive agreement around joint-BEV development," he wrote Wednesday, "we believe investors should prepare for significant levels of potential collaboration to share development and manufacturing costs." The term "BEV" refers to battery-electric vehicles.
Jonas cited a June 26 Bloomberg report that an expanded Ford-Volkswagen alliance could arrive Thursday, at a meeting of Volkswagen's supervisory board. The tie-up is likely to include an investment in Ford's Argo AI self-driving car unit.
Jonas explained why the move is critical for Ford's long-term strategy:
Jonas expects Ford's move to BEVs to deliver a hit to near-term earnings, but prove ultimately beneficial. He has an equal-weight rating and price target of 10 on Ford shares.
Ford stock finished unchanged at 10.20 on the stock market today. Shares are eyeing a potential 10.60 flat-base buy point. GM stock gained 0.9% to 38.50 and has been meeting resistance near the 40 level. Volkswagen stock edged up 0.1% to 17.56 as it consolidates with an 18.94 entry.
GM stock, Ford stock and Volkswagen stock all have relative strength lines that have made little or no progress in 2019. The RS line, the blue line in the chart above, tracks a stock's performance against the S&P 500.
Tougher clean-air rules take effect in the European Union in 2020, compelling automakers such as Volkswagen and Ford to comply with more electric vehicles or risk huge fines.
An expansion of the Ford-Volkswagen partnership would come after they announced a pact on commercial vans and trucks in January.
Don Kaufman delivers what readers are calling 'HIS BEST YET!' In this exclusive Guide, Don will give you ALL the secrets he's taught millions of other traders to help guide them along in their successful options trading journey...
Now, this is NOT for those who only want to make a HALF attempt...nope...this is ONLY for those serious about becoming a better trained, more profitable, and long term options trader!
If that's YOU...Download Your Copy below: