What seemingly invincible company is most likely to crash in the next 10 years?

Many think of this as the original American company, a pioneer of modern industrial practice. But in 2018, it is driving on paper-thin ice.

Ford Motors.

Last year, Ford saw “sales of practically every vehicle class except the F-150 showing significant erosion, along with a freefall in Chinese sales.”[1]Revenue in Europe increased, but that is likely to crash soon. Most of the Ford plants in Europe are in Britain. With Brexit, they will suffer tariffs and other difficulties trading with the mainland. They may be forced to move their factories at massive cost.

More recent developments - Trump’s 25% tariffs on China - have also been painful for Ford. They had to cancel plans to import the Ford Focus into the US from plants in China. Just last year, Ford took a loss of $633 million in China.

This year, Moody’s downgraded Ford’s credit rating, saying “the credit outlook is negative.”[2] The cost of Ford’s debt is now higher than their competitors, making it more difficult for the company to keep up. In total, their net income dropped by nearly half this year.[3]

But some companies have survived through worse news items than the above. After all, Ford was one of the few American car companies that survived 2008 relatively unscathed. It’s not just those that worry me. Broader structural problems with Ford will sabotage the company in the long-term. Their strongest sales come from SUVs, trucks, and sports utility vehicles. In fact, recently the company pivoted to stop producing most of their ordinary car models and focus on these vehicles instead.[4]

These are the very vehicles that will suffer from increasing gas prices, regulations on high-emitting vehicles, and subsidies for electric vehicles. The IMF expects gas prices to continue to increase over the next decade.[5]I think these forecasts are conservative, because the threat of global climate change may drive governments to enact ‘sin taxes’ on gas. Electric vehicles are becoming cheaper and gas is getting more expensive. That’s not a good combo for Ford.

I also think the concept of every family owning their own gas-guzzling car will die in the next decade. When self-driving cars reach the market on a mass scale, taxi services will become much more effective. Having a car will be gratuitous. Plus, more and more people are moving to the cities, and cities are expanding their public transit options. These two factors, along with the rise of cheap electric cars, will bring about the death of old gas-based car producers.