Ford (F): A look at how the automaker views some of the major changes in the industry

Shares of Ford Motor Company (NYSE: F ) fell 5% on Thursday. The stock has fallen 46% this year. Ford, the leader in the automobile industry, has changed its strategy and adapted to the new trends in the space. The company sees electrification, software and autonomy as the three main forces transforming the industry. Here are some of our efforts and thoughts on the area:

Electric vehicles

Ford is seeing significant success with electric vehicles. In November, EV sales rose 103% compared to last year, with Ford trailing only Tesla (NASDAQ: TSLA ) as the best-selling brand and EV manufacturer. Ford’s EV sales expanded by approx. twice the rate of the overall EV segment during the month.

The F-150 Lightning is the best-selling electric truck while the Ford E-Transit holds 80% market share in the commercial EV industry. Mustang Mach-E sales in November rose 14.6%. Ford’s share of the EV segment increased by about 2 percentage points over the past year and was 8.6% in November.

Ford aims to produce 600,000 EVs by the end of next year and 2 million by 2026. At an analyst event last month, the company said cost, infrastructure and battery materials are the main bottlenecks hindering EV adoption. Ford mentions that companies that can build a charging network and establish a stable battery supply chain will succeed in this space.

Autonomy and software

During the third quarter of 2022, Ford made important changes to its autonomous vehicle strategy. They decided to liquidate the Argo AI business because it failed to attract new investors. Argo was created for the development of Level 4 advanced driver assistance systems (ADAS). Although the company remains optimistic about Level 4 autonomy, it believes there is still a way to go before profitable autonomous vehicles become a reality.

At the analyst event, Ford said that if the L4 vehicle is developed, it will be very expensive and require maintenance. Also, it takes time to work in all kinds of weather conditions.

Ford will focus on the development of L2+ and L3 systems that will provide customer benefits, fuel adoption and expand revenue and profit opportunities. The company believes that there is an addressable market and the potential for a highly accretive new revenue stream associated with Level 3.

At the analyst event, Ford stated that software is the biggest change in the industry. He said the software in the car is now taking over some of the functions that used to be done mechanically and this software is distributed by suppliers. The company believes that the software will define the product for its customers.

Click here to read the full transcript of Ford’s Q3 2022 earnings conference call