Ford shareholders know the electric vehicle (EV) revolution is gathering pace. US President Biden is pushing a $2.2 trillion plan to ‘Build Back Better,’ which envisions that 50% of cars on the road will be powered by electricity by 2030. In the UK, politicians are debating how to plug the £35 billion taxation ‘black hole’ that will be created as ICE cars are abandoned.

Meanwhile, 14% of all cars sold in the EU in 2021 were electric, with the bloc planning to go all-electric by 2035. In Norway , EVs made up 84% of all new car sales last month. And in China, they jumped 160% to 2.91 million in the last year alone.

Ford shares: US market changes

The EV trailblazer is of course Tesla. But at $891, its share price is down 25% in the past month, as investors fret over supply chain issues, the lack of new models, and CEO Elon Musk’s belief that its humanoid robot could become ‘more significant’ than its car business.

And currently, 96% of all new vehicles sales in the US use internal combustion engines, a demonstration of American resistance to the EV revolution. This can partly be explained by cultural differences; the 111-mile trip from London to Birmingham is a grand day out for many UK drivers, but barely constitutes a road trip to the average rural Texan. But with EV range now averaging 194 miles, the barrier to mass adoption may be lifted.

And while Biden’s target appears overly ambitious, there is precedent for rapid historical change. Before Ford's Model T was released in 1908, there were fewer than 200,000 cars on US roads. For context, there were 26.5 million horses in 1915, shared between a population of 100.5 million people. But by the 1920s, more than half of the registered automobiles worldwide were Fords, and when 15 million Model Ts had been sold by the time production ended in 1927.

Ford and General Motors shares

And over a century later, Ford may also take over the next transport innovation. The Bank of America believes ‘2022 marks the start of commercialization for electric vehicles.’ And it predicts Ford and General Motors (GM) will be the ‘biggest share gainers’ in the EV market, while Tesla’s EV market share will fall from its current 69% to 19% in 2024.

With 15.15% market share, GM is the US auto market leader. But Ford comes in third, controlling 12.63%. Meanwhile, Tesla owns a meagre 2.02%. And significantly, it is no longer working on its once promised $25,000 car, which would open the floodgates to mass adoption.

Moreover, GM and Ford are planning to spend a combined $65 billion on EVs by 2025. Last year, Ford became the second best selling EV brand behind Tesla, with CEO Jim Farley calling it ‘an important early step toward eventually being the true EV leader.’ And commenting on Q4 results, Farley emphasised ‘we’re also proud that customers see how Ford is taking EVs mainstream and have already ordered or reserved more than 275,000 all-electric Mustang Mach-E SUVs, F-150 Lightning pickups and E-Transit commercial vehicles.’

Andrew Frick, Ford’s vice sales president of US and Canada believes 2022 ‘represents a turning point for Ford in electrified vehicles, as our electrified portfolio grew at nearly four times the rate of the industry segment.’ Moreover, full-year 2022 adjusted EBIT is expected to be between $11.5 billion to $12.5 billion, up 15-25%. And last month, Ford EV sales rose 167% to hit a new record.

Meanwhile, GM says ‘strong demand is driving the acceleration of our EV manufacturing,’ describing customer reaction to the company’s Hummer EV pickup as ‘overwhelming.’ And it’s announced a $7 billion investment, — ‘the single largest in our history’ — for ‘a massive expansion of battery cell and EV assembly capacity in the United States.’ And since 2020, GM has invested ‘more than $14 billion in 10 sites across North America to increase our manufacturing capacity in the region to more than 1 million EVs annually by the end of 2025.’

The Ford share price is down 18% over the past month to $20, while GM is down 19% to $53. Like Tesla, both have been hit by the stock market sell-off. But with price-to-earnings (P/E) ratios of 28 and 8 respectively, they compare favourably to Tesla at 182.

And Tesla was worth only $100 per share only two years ago. It delivered under 1 million vehicles worldwide last year, while total US vehicles sales topped 15 million. GM and Ford shareholders may be tortoises chasing the hare.

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