Jim Cramer is cautious about Ford (F) due to the heightened risk of a United Auto Workers strike, which has been a recent overhang on the Club stock. But, Jim is encouraged by the automaker’s electric vehicle efforts and its embrace of other emerging technologies. UAW strike concerns Ford shares had seen a nice rally from mid-May into early July when they got near their 52-week high of $15.88 set last August. However, the stock has fallen roughly 19% over the past month to around $12 each as tense, ongoing negotiations between UAW president Shawn Fain and all the Detroit automakers have been garnering national attention. Fain has been vocal on his demands, some of which include increased paid time off and higher pension benefits. The union’s current labor contract with Ford is set to expire on Sept. 14. President Joe Biden on Monday urged both the UAW and the automakers to “work together to forge a fair agreement.” Due to growing concerns about a potential strike, Jim Cramer said Monday he is “not in a hurry to buy” more Ford and advised investors not to purchase shares of the automaker into weakness. Deutsche Bank, meanwhile, said that while UAW demands could impact earnings, a work stoppage would be a “large but not destructive headwind.” Still, we are very concerned about a potential UAW strike. The recent slide in Ford shares has cut its year-to-date gain to just 3.5% compared to the S & P 500 ‘s advance of roughly 16% in 2023. F 1M mountain F stock’s 1-month performance. New software hire Also Monday, Ford announced the hiring of former Apple executive Peter Stern to lead a new business unit at the company called Ford Integrated Services. We see it as a positive development. Stern, as a Services vice president, had overseen Apple TV+, iCloud, and other key offerings. The purpose of Ford’s new unit is to strengthen the customer experience by expanding its software services across its three business units: Ford Blue (the legacy internal combustion engine, or ICE, business), Model e (the electric vehicle unit), and Ford Pro (the division created to commercial fleets). Ford is looking to boost recurring revenue streams that have worked for tech companies and EV rival, Tesla (TSLA). Ford said it already has 550,000 paid software and service subscribers that delivers hundreds of millions in revenue. The company is already seeing 50% gross margins on those software services, CEO Jim Farley said during a call with reporters following the announcement. Ford’s EV transition The new software services push is just one more way Ford is embracing new technology. Building out its electric vehicle offerings is another way. While we’re willing to give Farley and Ford time to ramp up EVs, Barclays and Morgan Stanley analysts expressed concern about whether the automaker is focusing too heavily on electric vehicles. In a recent research note, Barclays said traditional original equipment manufacturers (OEMs) like Ford and General Motors (GM) are “between a rock and a hard place” on their EV transitions, citing weaker consumer demand for electric vehicles, competition from market leader Tesla, and lack of charging infrastructure. In a separate note, Morgan Stanley said continued losses in Ford’s EV business could “threaten the company’s strong position with core retail and commercial customers,” by potentially impacting its value proposition. A weaker EV demand environment has been a burden on Ford’s transition. While Ford’s earnings before interest and taxes (EBIT) losses in its Model e division in Q2 more than doubled year-over-year to $1.08 billion, we understand that EVs at Ford are like a small business and will take time. Strong profitability from its ICE and Pro divisions provided a much-needed offset . And, management provided significant upward revisions to its overall full-year profit and cash flow outlook and reiterated Ford’s commitment to delivering an 8% EBIT margin target in 2026, though the losses at EV create some debate about Ford’s ability to hit those numbers. In Ford’s earnings press release, however, Farley said “EV adoption will be slower than expected” in the near term. He said the company is now expecting a 600,000-unit annual production run rate for EVs by late 2024. Ford had previously been estimating that run-rate goal for the end of this year. On the more positive side, Ford has also been using price cuts as a lever to influence EV demand, and that strategy has been working. In July, Ford announced price cuts for its electric pick-up F-150 Lightning, passing along savings due to increased plant capacity, lower cost of production, and improving battery costs. As a result, orders for F-150 lightning rose six-fold as of August. But like anything, Ford will have to balance price versus volumes to minimalize losses. (Jim Cramer’s Charitable Trust is long F, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Jim Cramer is cautious about Ford (F) due to the heightened risk of a United Auto Workers strike, which has been a recent overhang on the Club stock. But, Jim is encouraged by the automaker’s electric vehicle efforts and its embrace of other emerging technologies.