Ford Is All In on EVs. One Analyst Isn’t Buying It.

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Ford Motor

made waves this week, announcing plans to create separate business units inside the company, one for electric vehicles and the other for traditional cars. Management believes that is the best way to win the coming EV wars.

Morgan Stanley analyst Adam Jonas isn’t buying it. He does not think the new structure will lead to

Ford

hitting its ambitious EV goals, although he said the company (ticker: F) may have set a pattern other traditional car companies can follow.

“Ford targets over 2 [million] units of EVs by 2026, ”Jonas wrote in a Wednesday report. He is projecting just 560,000 units a year for Ford by then. “At this stage we simply do not have confidence in the ability for Ford – or GM for that matter – to secure the materials… in sufficient quantity and quality / efficacy to deliver on an EV number anywhere near this level within four years.”

For Jonas, EV materials amount to all the components needed for batteries, plus the equipment to produce them, not to mention all the other infrastructure required to make electric vehicles.

The structure will not lead to Ford hitting its profitability goals, Jonas argued. He predicts Ford will be generating operating profit margins of about 4% in 2026, corporate-wide across all its divisions, while management’s goal is 10%.

The company did not immediately respond to a request for comment.

Jonas rated Ford stock at Sell, with a target of $ 13 for the price, even before his latest research note. The divergence between Ford’s targets and his projections fits with his downbeat view.

Still, Jonas sees some logic in creating a separate unit. It will bring some clarity to EV profitability. While “there are high risks ahead, we believe Ford may be in a better position to address such risks under this new structure,” he wrote.

He said he is looking for other traditional auto companies to follow Ford’s lead. The most obvious candidate to do that in the US is

General Motors

(GM).

GM appears to feel confident about its current structure. “The EV organization we started building back in 2019 is the reason we are able to scale our all-electric business to 2 million units of global capacity by the end of 2025,” GM said when asked if it might pursue a similar shake-up .

The company has been aggressive in moving toward electric vehicles, committing billions to EV development and assembly capacity. GM has a goal to bring 30 new EV models to global markets by 2025.

Jonas rates GM shares Team and has a $ 55 price target for the stock.

Jonas’s peers feel better about the big car companies than he does. Almost 85% of analysts covering GM stock rate shares Buy and the average analyst price target is about $ 74 a share. Half of the analysts covering Ford stock rate shares Buy. The average analyst price target for Ford stock is about $ 22.

And Wall Street has endorsed Ford’s plan, albeit in a small way. The average analyst target price for Ford stock has gone up about 9 cents a share since the company announced its plans.

Write to Al Root at allen.root@dowjones.com