TLDR
- Transportation Secretary Sean Duffy sent a letter to Ford CEO Jim Farley raising “profound concern” over Ford’s ties to Chinese technology companies.
- The letter flagged Ford’s CATL battery license, a European joint venture with Geely, delayed Lincoln production moves, and talks with BYD on hybrid components.
- Ford pushed back, calling itself “the most American auto maker” and saying the letter was a “wrongheaded attempt to capture headlines.”
- Ford stock fell 4.2% on Tuesday, though most of that drop came before the letter was published, driven by higher oil prices.
- UBS held its Buy rating and $17 price target on Ford, implying around 20% upside from current levels near $14.09.
Ford stock slipped 4.2% on Tuesday after Transportation Secretary Sean Duffy published a letter to CEO Jim Farley expressing “profound concern” over the automaker’s relationships with Chinese companies. Ford stock was trading around $14.09, and UBS maintains a $17 price target on the stock, implying roughly 20% upside.
The letter called out four specific areas: Ford’s battery licensing deal with CATL, a European joint venture with Geely, slow progress on moving Lincoln production from China to the U.S., and reported talks with BYD over hybrid vehicle components.
Duffy warned that Ford’s Geely joint venture could help Chinese automakers “secure a vital foothold in Western markets.” He also suggested that deeper ties with BYD could embed “subsidized foreign technology” into Ford’s supply chain.
Ford was quick to respond. The company said the letter misrepresented its position and called itself the most American automaker, pointing to its vehicle assembly numbers and hourly worker headcount as evidence.
Ford also defended its CATL deal. The license is tied to battery production at its Marshall, Michigan facility and supports both its UEV platform and a battery energy storage business. Ford is confident the arrangement still qualifies for Production Tax Credits and Investment Tax Credits.
UBS Stands Firm
UBS reiterated its Buy rating after reviewing the situation. The bank values Ford’s battery energy storage business at around $2 per share within its price target model. That suggests UBS sees the CATL arrangement as an asset, not a liability.
Broader analyst sentiment is also tilted positive. According to InvestingPro data, 14 analysts have recently revised earnings estimates upward for the upcoming period.
Despite Tuesday’s drop, Ford stock was up 0.9% in early Wednesday trading. The S&P 500 was down 0.3% at the same time, meaning Ford was actually outperforming the broader market.
Coming into this week, Ford stock was up 22% over the past 12 months. That compares favorably to BYD, which is down 23% over the same period, and SAIC Motor, which is off 42%.
What the Numbers Show
European automakers have not fared much better. Mercedes-Benz is down 10% over 12 months, and Volkswagen is off 22%. U.S. tariffs have largely shielded domestic automakers from the price pressure and overcapacity hitting Chinese and European rivals.
Morgan Stanley kept its Equalweight rating and $14 price target on Ford, unchanged. That rating was issued following the appointment of Dave Carroll as president of Ford Energy, effective August 31.
Ford Motor Credit also recently issued $2.5 billion in new notes, split between 2029 and 2033 maturities, as part of routine financing activity.
A 50% tariff on Canadian automotive imports, set to take effect January 1, 2027, announced by President Trump, adds another variable to Ford’s outlook heading into the end of the year.
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