Key points:
- Ford announces cut back on production as the global chip shortage continues
- Bottlenecks are expected throughout 2022, creating a tense environment for manufacturers
- Competion and demand are increasing, not boding well for Ford's production cutback
Automobile manufacturers have been under surmounting pressure over the last year or so. Like a variety of other industries, supply chain issues have become an ever-present part of the economic landscape; negatively impacting everything from production outlook to estimated deliveries. Cutbacks and delays have resulted in a looming cloud that has not only threatened company growth but has darkened investor sentiment towards even the most respected manufacturers.
Ford (NYSE: F) has been making incredibly promising progress over the last year or so; the company’s EV endeavor has seen record levels of demand, with the F-150 Lightning acting as the crux of overall attention. Just last week, Ford CEO touted that the EV pickup could rival the Tesla Model Y in terms of demand – a bold claim, but one that finds fundamental grounding in the company’s monthly statistics.
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One of Ford’s key goals, in order to match Tesla and continue its path to maximizing market share, was to ramp up production over the coming year. Well, today, Ford has announced that they will in fact be suspending and cutting output at various factories due to the ongoing chip shortage – not exactly news investors will want to hear.
The only silver lining here, if we’re really looking for bullish reassurance, is that it certainly won’t just be Ford that will have to limit or cut back production targets following the ongoing chip shortage. It’s expected that the shortage should start to ease in the second half of this year, but ongoing bottlenecks might well remain into the following year.
With rising demand – Ford – alongside its competitors, needs to find ways of securing availability by working closely with chip suppliers and attempting to navigate the difficult environment. Ford has big expectations to uphold, but it’s all to play for in the coming year.