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The landscape of electric vehicles (EVs) is shifting, with consumers showing a growing preference for hybrids over purely electric vehicles. The surge in hybrid sales, including plug-ins, paints a compelling picture. In a recent year, Americans purchased a record 1.2 million EVs, marking a 46% yearly increase, while hybrid sales skyrocketed by 65%. Hybrids, encompassing plug-ins, have now secured a 10% share of new car purchases in the U.S., outpacing the market penetration of pure electric vehicles.

The regulatory landscape is tilting in favor of hybrid and plug-in hybrid electric vehicles as the U.S. administration sharpens its focus on reducing carbon emissions from passenger vehicles. The increasing stringency of auto emissions standards is expected to elevate the prospects for manufacturers of these types of vehicles.

One heavyweight in the race for hybrid EV market dominance is Ford Motor Company (F), a Michigan-based automobile manufacturer founded in 1903. Ford's diverse product portfolio spans trucks, commercial vehicles, SUVs, and luxury models under the Lincoln brand. With a market capitalization of $51.89 billion, Ford has seen a 14.5% rise in its stock price over the past 52 weeks, albeit trailing the broader S&P 500 Index, which surged by 30.5% during the same period. However, Ford has struggled over the long term, delivering a 15% decline in the last decade.

Ford made a strategic move by reinstating its dividend payments after the pandemic-induced suspension in 2020. The company raised its quarterly dividend to 15 cents per share, and also issued a special dividend of 18 cents per share. Currently yielding 4.6%, Ford's annual dividend of $0.60 per share is well-supported by its payout ratio of 61.4%, indicative of sound dividend coverage from adjusted earnings.

From a valuation standpoint, Ford appears attractively priced at 6.85x forward adjusted earnings and 0.29x sales, presenting a substantial discount relative to both industry peers and its own historical averages.

In the competitive EV market, Ford faced challenges, with its "Model e" segment incurring an EBIT loss of $4.7 billion, translating to a significant loss of $64,731 per EV sold in 2023. However, Ford saw a surge in hybrid sales, with Q4 figures demonstrating a remarkable 55% growth, amounting to 37,229 vehicles sold.

In its latest earnings report for the fourth quarter, Ford recorded a total loss of $526 million, primarily due to exceptional charges related to pension programs and international operational reorganizations. The company's profitability was further affected by heightened labor costs resulting from an extended strike by the United Automobile Workers (UAW) union. Despite these challenges, Ford outperformed market expectations, posting adjusted earnings of $0.29 per share and revenue of $43.21 billion, surpassing analysts' projections.