DETROIT – After a decade of mediocrity, Ford Motor stocks are up nearly 50% so far this year, hitting their best annual performance since 2009.
Investors like CEO Jim Farley’s new turnaround plan called Ford +, which aims to better position the automaker to build electric and autonomous vehicles and generate recurring revenue. So far, Ford electric vehicles like the Mustang Mach-E and the upcoming Ford F-150 Lightning have been well received by investors.
Ford Chairman Bill Ford says the company plans to maintain the momentum through 2022 and beyond, despite an ongoing global shortage of semiconductor chips that is causing production stoppages.
“When we released the Mustang Mach-E and then the F-150 Lightning, it really took a lot of people by surprise. Not just the fact that we came out with these vehicles, but honestly how good they were, ”he told CNBC. “I think you’re slowly starting to see that in the investor base. But that’s really the tip of the iceberg.”
Ford, whose great-grandfather Henry Ford founded the automaker, recently sat down with CNBC to discuss the company’s stock rally, turnaround plan, and special acquisition companies and private investors. Here are some highlights from this interview.
Ford said the reinstatement of the company’s coveted dividend, which was cut in March 2020, was “pretty prominent” on its to-do list, but it wouldn’t say when. Ford, chairman since 1999, and other company executives have said the time must be right as the industry continues to grapple through the coronavirus pandemic and a global shortage of semiconductor chips.
“We’re trying to do this as soon as possible,” he said. “We have a very large number of employees and retirees, and the dividend is very important to them.”
Ford said it doesn’t know if all of the company’s emerging initiatives under the Ford + plan are reflected in the current share price, but said that investors are starting to become aware of this.
“I think investors clearly understand that there is real change and that Ford will be a major player in that change,” he said. Ford later added that Ford’s underlying business is “very strong,” and the rate of change is higher than any other time in his 40+ years with the automaker.
The company plans to shift focus to a recurring revenue model as part of the plan, led by connected vehicle services and a focus on fleet customers, among other things. Every automaker is trying to do that as the industry is investing billions in new technologies like electric and autonomous vehicles.
The Ford family essentially controls the company through Class B preferred stock, which gives them 40% of the voting rights of the shareholders. It’s a system that has been in place since the company’s initial public offering in 1956, but not all investors believe it should continue.
This system has faced numerous challenges for shareholders. At this year’s shareholders meeting, 36.3% of voters supported a system that gave every share an equal vote, slightly more than the 35.3% average since 2013.
Ford continues to support the dual stock structure and says it is a “very positive thing” for the company. He said it allows Ford to focus for the longer term and not be another “nameless, faceless company”. He cited controlling the family in avoiding bankruptcy during the Great Recession, unlike GM and then Chrysler, now known as Stellantis.
Upcoming Ford CEO Jim Farley (left) and Ford Executive Chairman Bill Ford Jr. pose with a 2021 F-150 during an event at the company’s Michigan facility in Michigan on September 17, 2020.
Michael Wayland | CNBC
“We are not a nameless, faceless company and people know that there is a family, and in my case a person who goes through thick and thin, does not take a golden parachute and gets out and cares very much about the company”, he said.
Ford board members
Ford, 64, has no plans to step down from the company’s board of directors for the foreseeable future, even if a younger generation of family members join the board. His daughter Alexandra Ford English and nephew Henry Ford III were both elected to the company’s board of directors in May.
Ford, who joined the board in 1988, said the time was right for the two to become directors and learn the ropes. He said it was very valuable as a young manager to be on the board with his father and cousin Edsel Ford II, who left the board earlier this year.
“I wanted to give them the same kind of mentoring as they move forward and start lifting the torch for the Ford family,” he said.
Ford, co-founder and partner of the mobility capital venture firm Fontinalis Partners, said he wasn’t sure if SPACs are or will remain a flash in the pan. “I think time will tell, but it’s clearly another avenue to liquidity that we haven’t had recently,” he said.
Ford said many companies that Fontinalis is involved in are considering SPAC deals while others continue to pursue more traditional IPOs.
Fontinalis was founded in 2009. It focuses on emerging mobility companies. Investments included Lyft, Postmates, and lidar company Ouster. Ford said he co-founded the company believing such mobility companies would play a key role in the future of transportation.
Regardless of whether Ford investors are institutional or retail, Ford wants them to be long-term owners of the stock.
“What we really like is that at least, I will speak personally, we are long-term investors who want to join us on our journey,” he said. “And when it comes to private investors or institutional funds, that is definitely great.”