Jim Hackett’s Vision Could Change Ford’s Fortune in 2018



Ford’s new leadership in 2017

In 2017, Ford Motor Company (F) underwent key leadership changes when Jim Hackett replaced Mark Fields as the company’s CEO in May. Hackett has been in charge of the Ford Smart Mobility division since March 2016. In the first few months of 2017, Fields faced sharp criticism due to Ford’s stagnated profitability and consistently weaker stock performance. As a result, the board decided to let him go.

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Reallocating capital

In May 2017 when Hackett became Ford’s CEO, regaining investors’ confidence and reviving Ford’s profitability were two of his key challenges. At the same time, Ford couldn’t afford to stay behind in the race to develop autonomous vehicles and mass market EVs (electric vehicles).

In October 2017, Hackett told investors about his vision and plans for the company during a strategic update session. He revealed Ford’s plan to reallocate $7 billion to its SUV and truck segment from its car segment. Notably, SUV and truck sales in the US have risen in the past few years. Higher sales helped automakers improve their profitability. Ford’s move to strengthen its SUV and truck segment could help it gain from the ongoing US sales trend.

Focus on EVs and autonomous vehicles

During the strategic update session, Hackett also emphasized Ford’s plans to build a strong EV portfolio in the coming years. He suggested that the company has already increased the development of autonomous vehicles in 2017 with a focus on personal mobility.

Despite Ford’s recent efforts, it seems to be behind its direct peers (IYK) in the race to develop mass-market EVs. General Motors (GM) started to deliver its first mass-market EV Chevrolet Bolt in December 2016. It plans to add two more EVs to its portfolio in the next 18 months. Similarly, Toyota (TM) increased its investments in EV development in 2017. Currently, the EV segment in the US is primarily dominated by Tesla (TSLA).

Next, we’ll look at Ford’s valuation multiples at the end of 2017.


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