On Monday, automotive titan Ford Motor Co. (F, Financial) announced plans to invest up to 230 million pounds ($316 million) to transform one of its factories in the United Kingdom to build electric power units, the all-electric assembly that replaces an engine and transmission.
The Halewood on Merseyside location has been used for more than 20 years, through a joint venture between Ford and Magna, to build transmissions for Ford’s passenger and commercial vehicles. The transformation is expected to take several years, with production expected to begin halfway through 2024. Ford expects the factory to produce around 250,000 electric powertrains a year through the factory.
“This is an important step, marking Ford’s first in-house investment in all-electric vehicle component manufacturing in Europe. It strengthens further our ability to deliver 100 percent of Ford passenger vehicles in Europe being all-electric and two-thirds of our commercial vehicle sales being all-electric or plug-in hybrid by 2030,” Stuart Rowley, president of Ford of Europe, said.
According to Ford’s press release, the investment hinges on support from the U.K. government through its Automotive Transformation Fund, which aims to assist the switch to electric vehicles. An article from Reuters estimates contributions from the fund at an average of around 10% of the total investment value for any automotive company. This would place a burden of around $30 million on the U.K.
The U.K. government’s business secretary, The Rt. Hon. Kwasi Kwarteng MP, said: “Ford’s decision to build its first electric vehicle components in Europe at its Halewood site is further proof that the U.K. remains one of the best locations in the world for high-quality automotive manufacturing. In this highly competitive, global race to secure electric vehicle manufacturing, our priority is to ensure the U.K. reaps the benefits.
“Today’s announcement, backed by government funding, is a huge vote of confidence in Britain’s economic future and our plans to ramp up electric vehicle production. It will future-proof Halewood’s proud industrial heritage and secure high-skilled, well-paid jobs across the North West for years to come,” he continued.
Should both parties reach amenable terms for the investment, Ford will be set to ramp up its overseas production capabilities and should be set to drastically cut down on transport time and costs. The press release also claimed Ford as one of the U.K.’s largest exporters, exporting to more than 15 countries on six continents, with overseas sales generating around 2.5 billion pounds annually.
Electric parts built in the U.K. would be the icing on the cake for Ford of Europe. The company announced in May that it was making a $1 billion investment into the modernization and transformation of its Cologne, Germany manufacturing center. With the support of the Halewood facility, Ford should be set to make waves overseas.
Unfortunately for Ford (F, Financial) shareholders, the announcement saw the company trading at $15.56 per share, down 0.89%, with a market cap of $62.08 billion on Oct. 18. According to the GF Value Line, the stock is trading at a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 3 out of 10, a profitability rank of 6 out of 10 and a valuation rank of 4 out of 10. There are currently five severe warning signs issued for declining margins and revenue per share alongside poor financial strength. Ford’s cash-to-debt ratio of 0.28 ranks it worse than 70% of competitors despite landing within the company’s historical norms.
Top guru shareholders in Ford include Richard Pzena (Trades, Portfolio), Pioneer Investments, Jeremy Grantham (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Ray Dalio (Trades, Portfolio).
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