Aug 17, 2021 (Baystreet.ca via COMTEX) -- When automakers warned investors that the chip shortage would hurt supply, some companies took advantage of the situation. Ford /zigman2/quotes/208911460/composite F +8.70% is one of them.
Ford said it would delay Mach E orders by six weeks, citing the chip shortage. It will give 250kWh of free charging to compensate customers. This earns ford goodwill value but cuts into margins. The delay is a disappointment because Ford does not have a secured supply chain. Toyota /zigman2/quotes/200537742/composite TM +1.37% did not cut supply orders amid the COVID-19 pandemic and faces no such issues.
The Mach-E is disappointing because it will slow near-term growth rates. Ford stock peaked months ago and will face continued selling pressure from impatient shareholders. Investors could look at Tesla /zigman2/quotes/203558040/composite TSLA +3.80% , Nio /zigman2/quotes/204905836/composite NIO +3.76% , Li Auto /zigman2/quotes/219811686/composite LI +2.27% , and XPeng /zigman2/quotes/219982686/composite XPEV +0.74% to invest in pure-play EV stocks instead.
Ford compounded revenue growth problems when it said it would halt delivery of some of its new Bronco sports-utility vehicles. It cited a production problem. Ford said that it would replace the roofs for some units due to their appearance.
On July 16, Ford recalled 851,000 vehicles due to faulty parts. This will hurt profit margins in the next quarter.
Ford still has quality issues and the delivery delays for its new products hand a win to the competition. Expect Ford stock to underperform for now.
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