Ford EV Update - 2Q23

Locator: 45254EVS.

Link here.

And more:

As we first noted last week, Ford is slated to lose $4.5 billion from its EV segment this year, a $1.5 billion larger loss than the company had expected. 

So far this year, the division has lost $1.8 billion and this year's $4.5 billion loss figure blows away last year's $2.1 billion loss. Ford also announced that its electric F-150 pickup trucks will undergo a price cut.

But reality has sunk in about the company's comments regarding its EV production schedule and spending plans. Price cuts in the industry, led by Elon Musk and Tesla, have thrown Ford's production targets into a tailspin and Morgan Stanley noted on Friday morning that "major changes to the EV strategy" could be necessary, according to a wrap up by Bloomberg. 

Ford now says it is "throttling back" on plans to ramp up EV production, the wrap up said. It blamed the price war for EVs as part of the cause and told shareholders it would need another year to meet its target of 600,000 EVs produced annually. 

Ford CEO Jim Farley said late last week: "The shift to powerful digital experiences and breakthrough EVs is underway and going to be volatile, so being able to guide customers through and adapt to the pace of adoption are big advantages for us. Ford+ is making us more resilient, efficient and profitable, which you can see in Ford Pro's breakout second-quarter revenue improvement (22%) and EBIT margin (15%)."

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Earlier

Earlier this year.

From the linked article:

Ford Motor Company has sold a majority of its Rivian shares, according to regulatory filings. 

Ford’s stake in the electric vehicle maker, which has been dropping steadily since May 2022, is now at 1.15%, or 10.5 million shares. 

The sell comes a week after Ford reported a $7.3 billion write-down on its Rivian investment last year. Since February 2022, Rivian’s stock has plummeted almost 70%. 

Ford has followed this playbook with Rivian before: Report a write-down, then sell to recuperate some of the losses. 

Last April, Ford reported a $5.4 billion “mark-to-market loss” on its investment in Rivian. The following month, Ford sold 15 million shares in two separate transactions, bringing its stake in the EV maker below 10%. Ford’s relationship with Rivian began with a $500 million investment in the precocious EV startup back in 2019. At the time, Ford also said it would build a vehicle on Rivian’s “skateboard” platform. The legacy automaker canceled those plans in November 2021, citing a shift in direction toward building its own lineup of EVs. Four months later, Ford increased its in-house electrification investment to $50 billion through 2026, up from the previous $30 billion by 2025. The automaker also said it would run its EV unit as a separate business from its combustion engine business. 

Other companies, like Amazon, have reported several losses from their investment in Rivian. 

Last week, Amazon reported a $2.3 billion valuation loss in its Rivian stock, which caused a hit to its income. Why are companies paying the price for investing in the promising, if not troubled, EV company? Recall that Rivian’s stock hit a high of $179.47 per share before falling to the $19.62 it is at today.

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Amazon

Has reduced its Rivian holdings, from around a 30% stake in the company to 17% at last report.  Archived.