Quiver Quantitative - Ford Motor (NYSE:F) announced a retraction of its full-year results projection, attributing this decision to the awaiting approval of its recent agreement with the United Auto Workers (UAW) union. This announcement, coupled with warnings about increasing losses in the electric vehicle (EV) domain, led to an almost 5% drop in Ford’s share price during after-hours trading. This move follows a temporary resolution between the automaker and the union, characterized by a tentative accord which promises a 25% wage increment for a massive 57,000 workers over a span of 4.5 years. This agreement came in the wake of a strike that halted operations at some of Ford’s major facilities.
John Lawler, Ford’s Chief Financial Officer, during a media session, elaborated on Ford's decision to postpone a segment of its ambitious investment in new EV production capacity. He pointed towards the substantial drop in EV prices, hinting at the challenges posed by this market shift. Lawler summarized the dilemma faced by Ford, which, like numerous other automotive giants, is attempting to strike a balance between EV demand, pricing, and profit margins. In a parallel move, General Motors (NYSE:GM), a prime competitor, also retracted its forecast for 2023 and postponed the launch of an electric truck manufacturing facility in Michigan by a year.
Ford's Q3 adjusted earnings per share amounted to 39 cents, a noticeable shortfall from the Wall Street's average expectation of 45 cents. The company's EV segment revealed an unanticipated loss before interest and taxes, standing at $1.3 billion. Furthermore, Ford has projected an annual loss amounting to $4.5 billion for the Ford Model e division. The company highlighted the sharp drop in EV prices and profitability, emphasizing that consumers displayed reluctance in shelling out a premium for EVs over their combustion and hybrid counterparts.
However, it wasn’t all bleak for the automotive giant. Ford's revenue for the third quarter showed an encouraging 11% surge, reaching $44 billion, with a net profit of $1.2 billion. This is a stark contrast from the loss of $827 million reported during the same period in the previous year. Both the Ford Pro commercial vehicle segment and the Ford Blue hybrid and combustion vehicle section showcased a year-on-year escalation in revenue, EBIT, and EBIT margins. Yet, the economic impact of the strikes at the renowned Detroit Three automakers, including Ford, has accumulated to an alarming $9.3 billion, as per data from the Anderson Economic Group.
This article was originally published on Quiver Quantitative