Ford Motor Company's (NYSE: F) stock has been lackluster for long-term investors. If you put $100 in the automaker 10 years ago, you would have a total return of just $128 today (including dividends). Meanwhile, the S&P 500 Index would have given you $339. And let's not even get started on Tesla, which has created more than a few millionaires while Ford's stock was stuck in idle.

Can Ford's ambitious electric transition finally turn things around, or should investors finally jump ship? Let's dig deeper to find out what the next half-decade could have in store for the iconic company.

The old bull thesis

A few years ago, Ford's bull thesis was quite simple. The legacy automaker would quickly shed its lumbering, traditional gas-powered business to focus on electric vehicles (EVs), leveraging its strong brands like the Mustang and F-150 pickup truck to rapidly gain market share.

Investors seemed to believe that EVs would inherently boast better profit margins than vehicles with internal combustion engines, and with good reason. Since 2020, Tesla's operating margins have dwarfed Ford's and earned it a much higher valuation. Tesla shares still trade for a forward price-to-earnings (P/E) multiple of 70, compared to Ford's 6.2.

It looked like Ford's aggressive transition to the new technology could unlock significant value, especially when combined with the larger company's robust supply chain and expansive dealership network.

The electric dream is fading

With 72,608 all-electric vehicles sold in 2023, Ford is one of America's largest EV makers. But the underlying assumptions that helped justify the company's ambitious transition are beginning to unravel.

For starters, EV competition is rising. And even Tesla is facing pressure, with its operating margin falling from 11.4% to just 5.5% in the first quarter.

Ford's problems are even worse. The company's Model E segment (which focuses on consumer EVs) saw revenue decline 84% to $100 million after a 20% decline in sales volume, indicating a stunning reduction in pricing.

According to CNN, Model E lost $132,000 for each of the roughly 10,000 cars it sold in the period, and management expects this segment to lose a total of $5 billion in the full year 2024.

The silver lining is that Ford's enterprise-focused EV models (such as the E-Transit vans) are helping pick up the slack in Model E performance. Over the coming years, investors should expect this to become an increasingly important part of its EV business as optics and political incentives continue to push companies and government agencies to greenwash their supply chains. The U.S. Postal Service, for example, ordered 9,250 of Ford's E-Transit vans to be delivered this year.