How Will the Novelis Fire Affect Ford's Aluminum Supply?

Ford Motor Company F faces potential production challenges following a late-night fire at Novelis’ aluminum plant in Oswego, New York, which has disrupted a key supply of aluminum used in the F-150 pickup. The Sept. 16, 2025, blaze destroyed the plant’s hot mill, critical for producing automotive-grade aluminum, forcing much of the facility offline until early next year.

Novelis, which provides roughly 40% of the aluminum sheet used by U.S. automakers, counts Ford as its largest customer. The automaker depends heavily on the Oswego plant for materials used in its aluminum-bodied F-150, its most profitable model, per The Wall Street Journal, as cited in an MSN article.

Ford acquires aluminum from multiple suppliers and has been collaborating closely with Novelis since the incident. A dedicated team is exploring alternative sourcing options to minimize any disruption. The company is expected to outline the financial and operational impact of the outage in its upcoming earnings report.

The incident adds to ongoing supply-chain challenges for the auto industry, which has already faced trade tensions, semiconductor shortages and dependence on China for rare-earth materials used in electric vehicles. F carries a Zacks Rank #2 (Buy) at present. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Along with Ford, several other major automakers, including Toyota Motor Corporation TM, Hyundai, Volkswagen and Stellantis N.V. STLA, source aluminum from Novelis, per a regulatory filing. Toyota is collaborating with alternative aluminum suppliers to offset the effects of the fire. Per Toyota’s spokesperson, while the company’s supply-chain team has been actively managing the situation and is in relatively good shape, it is not completely out of the woods.

Stellantis is also taking steps to minimize any potential operational disruptions caused by the fire. In its supplier-risk disclosures, Stellantis highlighted efforts to diversify its supplier base to reduce reliance on individual vendors and better manage potential supply risks.

F’s Price Performance, Valuation and Estimates  

Ford has outperformed the Zacks Automotive-Domestic industry year to date. Its shares have gained 28.3% compared with the industry’s growth of 8%. 

 
From a valuation perspective, F appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.31, lower than the industry’s 3.32. 

 
The Zacks Consensus Estimate for F’s 2025 and 2026 EPS has moved up 2 cents and 4 cents, respectively, in the past 60 days. 

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This article originally published on Zacks Investment Research (zacks.com).

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