F: A Most Interesting Report -- April 24, 2024

Locator: 470627FORD.

EVs are tracked here.

Link here.

Data points and comments from the article:

• Ford's traditional business, known as Ford Blue, reported adjusted earnings that were down 66% compared to a year earlier 
• Ford has faced years of inflated warranty costs, which have affected its earnings
• sales of Ford Motor trucks and other commercial vehicles led the automaker to beat Wall Street’s earnings estimates for the first quarter, offsetting losses of its electric vehicles.
• the automaker now expects to generate adjusted free cash flow of $6.5 billion to $7.5 billion, up from a previous outlook of $6 billion to $7 billion. 
• its forecast for capital expenditures is now $8 billion to $9 billion, narrower than the $8 billion to $9.5 billion range it originally estimated.
• EPS: 49 cents adjusted vs 42 cents expected;
• automotive revenue: $39.89 billion vs $40.10 billion expected 
• Ford’s overall revenue for the first quarter, including its credit business, increased about 3% year over year to $42.78 billion. 
• net income for the period was $1.33 billion, or 33 cents per share, compared with $1.76 billion, or 44 cents, a year earlier. 
• adjusted EBIT declined 18% year over year to $2.76 billion, or 49 cents per share.

This report seems it was written by Phil Le Beau.

Below is the story of Ford's EV business as reported by CNN: link here.

From the linked article: 

Ford’s electric vehicle unit reported that losses soared in the first quarter to $1.3 billion, or $132,000 for each of the 10,000 vehicles it sold in the first three months of the year, helping to drag down earnings for the company overall.

Ford, like most automakers, has announced plans to shift from traditional gas-powered vehicles to EVs in coming years. But it is the only traditional automaker to break out results of its retail EV sales. And the results it reported Wednesday show another sign of the profit pressures on the EV business at Ford and other automakers.

The EV unit, which Ford calls Model e, sold 10,000 vehicles in the quarter, down 20% from the number it sold a year earlier. And its revenue plunged 84% to about $100 million, which Ford attributed mostly to price cuts for EVs across the industry. That resulted in the $1.3 billion loss before interest and taxes (EBIT), and the massive per-vehicle loss in the Model e unit.

The losses go far beyond the cost of building and selling those 10,000 cars, according to Ford. Instead the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off.

And that means this is not the end of the losses in the unit - Ford said it expects Model e will have EBIT losses of $5 billion for the full year.

The company said it is its “intention” to be have EV pricing cover the actual costs of building each EV, rather than covering all the research and development costs, within the next 12 months. But a price war among EVs for about a year and a half has made even that measure of profitability very difficult said Ford CFO John Lawler. He said while Ford has removed about $5,000 in cost on each Mustang Mach-E, “revenue is dropping faster than we can take out the cost.”

In 2023, Ford Model e reported a full-year EBIT loss of $4.7 billion on sales of 116,000 EVs, or an average of $40,525 per vehicle, just more than a third of the first quarter loss.