What Every Ford Investor Should Know Before Buying

With the stock still down from its early 2022 peak but also now coming up and off a multiyear low hit earlier this year, investor interest in Ford Motor Company (NYSE: F) is understandably strong.

Before diving in, however, there are three things potential investors might want to know.

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Three things to know before you buy

Ford is one of the oldest, biggest, and best-known automobile manufacturers in the world, doing $185 billion worth of business last fiscal year. Its share of the highly fragmented U.S. market is about 14%, where it focuses most of its efforts.

But there's always more to the story -- even for iconic brand names like this one.

1. While revenue is growing, Ford's profits aren't

With some help from more pricing power, revenue growth has been rekindled since the wind-down of the pandemic, reaching record levels this year.

Things are different now than they've been in this company's past, though. While sales are growing, profits aren't. Indeed, they're actually still shrinking as costs and competition continue to pinch profits.

Data by YCharts.

2. Production and assembly costs are the biggest perpetual challenge

Yes, newly imposed import tariffs are part of the profit problem. Ford CEO Jim Farley reckons they're adding between $1 billion and $2 billion in total operating costs per year, in fact. That's too much for a company that only reported net income of about $6 billion in 2024.

Relatively high production costs are nothing new here. Like its competitors, Ford's been heavily outsourcing manufacturing and assembly to overseas partners as a means of culling costs since the 1970s. The National Highway Traffic Safety Administration reports that only about half of an American-made car is actually made in America (or even Canada), in fact.

This isn't apt to change in the foreseeable future either, with the industry forever scrambling to find new ways of bringing an affordable, newly built automobile to the market.

3. Ford's massive investment in electrification is a make-or-break kind of move

Finally, while the company's been hot-and-cold with its focus on electric vehicles (EVs), it now seems more committed to battery-powered automobiles than it ever has. In August, it began making a $5 billion investment that should ultimately allow it to manufacture EVs with a starting price point of $30,000 by 2027, putting the company waist-deep into the electric vehicle business.

This is likely only the beginning, though. Even if Ford's gotten nowhere near actually deploying this much money to the effort, back in 2022, the company indicated it would be investing $50 billion into electrification, underscoring the scope of spending needed to capitalize on the EV opportunity.

This financial commitment, of course, is a big one, with no assurance that consumers are actually looking for a new kind of car from an old manufacturer.

The risk and reward are commensurate

The chief challenge for interested investors right now is simply that the future is still so murky. Ford can navigate always-high production costs, and certainly, there will be more demand for electric vehicles in the future than there is now. There are widely varying degrees of success on both fronts, though, leaving investors making judgment calls as to how well the company will actually perform.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.