F: Ford’s EV Investment Burdened its 2022 Finances, Fleet Profits Soften the Blow
- Development of Ford’s EV business is costing the company billions each year.
- Ford’s 2022 EV losses were made up for with $10bn profits in its fleet and internal combustion businesses.
- It’s EV business has grown quickly, and became the 2nd-highest EV seller in the US last year.
When one thinks of electric vehicles, they often think of Tesla (despite Chinese automaker BYD now commanding almost double the share of the global EV market that Tesla does). How could it not be Tesla? With its futuristic-looking cars, humanoid robot launch events, and larger-than life CEO. For some time now, Ford has been trying to change that – at great cost. Let’s check in with how they’re doing.
A hefty investment
Ford has reported that over the course of 2022, the company lost $2.1bn in the operations of the EV portion of its business. What’s more is that the automaker is predicting 2023 to follow the same trend, with an even greater forecasted loss on its EV unit of around $3bn. The good news for Ford however, is that last year’s loss was more than negated by the success of the company’s fleet and internal combustion businesses which generated $10bn in profit over the same period. Ford’s also sticking to its goal of being able to produce 2m electric vehicles per year by the end of 2026.
The electric effect
Ford is ready to go toe-to-toe with big names in the EV industry, and is so confident that they’re going to begin reporting their financials by business unit as opposed to region. This will allow for detailed insight into the funding behind its EV unit specifically. It could take a while however before the unit turns profitable, as analysts predict that Ford currently loses $9k on every EV it sells. Last year, Ford became the 2nd-highest seller of electric vehicles in the US after Tesla, but its eyes are set on the number one spot.
Robin Edqvist / Unsplash
Ford goes tit for tatThe success of Tesla’s recent price cuts has got other EV manufacturers thinking it could work for them too.
- Ford has announced that the price of its electric Mustang will be slashed by $4.5k, as it battles with a depressed EV market. It’s also moving to discount its financing rates on the Mach-E Mustang to as little as 5.3%. Analysts are predicting that growth in the EV market will begin to significantly slow in the months to come.
- The move comes shortly after EV competitor Tesla cut prices on its vehicles by 20% – which seems to have had a major impact on its sales during Q4. With its share price down by almost 35% over the past year, Ford might be trying to work some of the same magic.
- Ford’s also doubling down on the production of its electric Mustang – aiming to produce 130k units this year in comparison to last year’s 78k. By investing $50bn into its EV offerings, Ford wants to have produced 2m electric vehicles by the end of 2026. It’s a lofty aim, but it will need to be ambitious to counteract Tesla’s growing market share.
Denin Lawley / Unsplash
Less-than-electricFord’s on a bumpy road with its electric truck, with yet another price increase for the popular model causing a stir.
- Shares in Ford dropped by 7% on Friday, after the company announced that the price of its F-150 Lightning electric trucks would be increased by $4k to almost $56k. As it stands, the Lightning truck represents about 33% of Ford’s EV sales.
- Ford’s hand has been forced by rising raw material costs, which is putting pressure on profit margins and putting investors on edge. The current price of the model is now 40% more expensive than the truck’s original price of $40k in May 2021.
- On the plus side, the company is seeing very strong demand for the model. Ford reported that over 2k Lightning trucks had been sold in the US in November and is now looking to ramp up its current annual production capacity of 150k units over the coming year.
Ford’s fragile financesYou know when your car’s super low on gas so you turn off the AC and go as slow as possible to prolong what’s left in the tank? Well, that’s kinda where automakers are at rn.
- Ford has warned investors that it’s facing an extra $1bn in costs related to supply chain constraints and inflation, which has not only upped the price of materials but led consumers to back-pedal on any major purchases.
- Up to 45k vehicles have been impacted, mostly high-margin trucks and SUVs that have been left partially built or unable to reach dealers thanks to the parts shortage – obviously its upcoming earnings will feel the sting of all this, and the effects will be felt into 2023.
- Shares had their worst day since 2011 with a 12% loss on Tuesday, taking prices to their lowest since the end of July and now down nearly 40% YTD. The update also pressured competitor General Motors to a 5.6% loss despite news that Hertz will be buying 175k of their EV's.
Ford ups the revsTraditional automakers handed the market a lil quarterly update this week, and we’ve got a bit of a mixed bag here – however Ford is the standout so far.
- Ford shares accelerated 6.3% in extended trading on Wednesday after beating on both ends with EPS of $0.68 (up from $0.12 in Q2 of 2021) on automotive revenues that leaped up by 57% to come in at $37.91bn. Overall sales increased by 1.8% and adjusted EBIT more than tripled to $3.7bn, tho net income was brought down by a $2.4bn decline in the value of its Rivian stake.
- General Motors wasn’t quite as lucky, dropping 3.42% on Tuesday after EPS of $1.14 missed estimates, representing a 40% drop in net income, though revenue of $35.76bn showed strength in sales. The company was unable to ship nearly 100k vehicles, thanks to parts shortages, though it maintained guidance for the year and says it’ll be ramping up production in H2.
- Both brands are investing heavily into EVs, with ambitious goals to take over Tesla, and have launched a slew of new electric models. Ford attributed part of its gains to high demand for its EVs, and GM CEO Mary Barra is still confident they can make the overtake. GM’s goal of building 400k EVs in the next two years lags behind Ford’s 600k goal – though the supply chain crisis could ruin both their fun.
Rafal Jedrzejek / Unsplash
Ford races ahead of competitorsThough Ford hasn’t been able to completely veer out of the way of inflation, the automaker is getting a sales-related nitroblast to help it stay ahead of the competition.
- Ford shares dipped on Tuesday to trade around their lowest levels since January 2021 after releasing a second quarter sales update that saw modest growth of 1.8% to sell 483.6k cars, but still missed analysts estimates – on the plus side though, June numbers are raring to go.
- Last month’s sales jumped by a whopping 31.5% thanks to impressive gains from its best-selling pickup truck line, seeing deliveries of its F-Series trucks lift 26.3% from the same time last year. It’s extra impressive bc the gains are in contrast to competitors like GM and Toyota, which (among others) both saw a sales slump in June.
- Ford’s EV efforts are being well rewarded. One of the vehicles strongly propping up sales was the electric F-150 Lightning, which is only in its second month on the market and has already booked 1,837 sales. The automaker’s overall EV sales lifted a massive 76.6% from a year ago to make it the second-best seller of plug-in cars behind Tesla.
Ford is fired upCar making giant Ford gets kicked up a gear by a Morgan Stanley upgrade, but it better watch out cause more competition could be on the way.
- Ford shares revved up by 8.5% on Friday to snap a six session losing streak. The stock has been weighed down recently by a broader market decline, sinking to a one-year low of $12.44 on Thursday.
- Morgan Stanley gave investors a boost of confidence by upgrading the stock to equal weight, positing that the market is underestimating the value of its commercial fleets and praising CEO Jim Farley’s forward-facing vision to sidestep supply challenges.
- But VW wants to steal some of the market share for itself. Ford continuously proves itself as a popular choice of car in both the EV and traditional car space, but Volkswagen has decided to step up US operations with its own EV and aims to increase its US market share from 4% to 10% in the next decade.
Dylan McLeod / Unsplash
A purring earnings engineFord’s Rivian stake did its best to slow down the automaker's first quarter, but it managed an earnings beat anyway and investors aren’t looking for any drama.
- Shares saw gains of 4% in extended trading on Wednesday after sliding in just above estimates in Q1, reporting EPS of $0.38 on revenues that were down over 4% at $34.5bn – though the stock is still down over 30% YTD.
- Rivian is taking a toll on the balance sheet. The EV maker has seen its shares sink over 52% in the first quarter, cutting the value of Ford’s stake in half (from $10.6bn to $5.1bn) and taking much of the blame for the traditional car maker's $3.1bn Q1 loss – it didn’t say if it would be selling its shares once the lock-up period is over though.
- The demand is there, but the supply is not. Ford said all of its vehicles, but in particular its electric pickup, but the chip shortage is delaying deliveries. It’s confident in its pricing power though, reiterating its previous forecast for operating earnings of up to $12.5bn.
Ford Lightning, yeah Ford LightningFord’s new electric pickup is automatic, it's systematic, it's hyyyydromatic – why it’s Ford Lightning, and it’s ready to take over the EV market.
- Ford has hiked its F-150 Lightning production plans in a big way, aiming to make 150k units of the vehicle in the next year or so, up from an original target of only 40k vehicles – the car has only just launched, and it’s already sold out.
- Ford is set to be the first automaker to bring an electric pickup to market, and in a quickly evolving industry like this that’s expected to absolutely boom in the next few years, “being a first mover is a very, very important move” according to CEO Jim Farley.
- A 150k a-year production schedule would dwarf the efforts of rivals, who include not only traditional automakers like GM’s truck company (who wanna make an electric Hummer), but also EV leaders like Rivian that have so far failed to execute truck production at a large scale.
Ford takes things up a gearFord is proving itself something of an EV speed demon, announcing some major updates to its electric efforts while trying to feed Tesla some dust.
🔍 Key points:
- Ford is making good on its promise to go all in on EVs in Europe, now planning to release seven brand new electric car models in the region by 2024, in the hope of selling over 600k EVs per year by 2026.
- It’s also making sure it has the factory capacity to achieve its goals. The automaker will be ramping up production at its Cologne plant by 2023, and is also installing a gigafactory in Turkey.
- Ford wants its vans to be emissions-free by 2035 in Europe, and these ambitious new developments come not long after the company split up its combustion and electric businesses earlier this month. Prices haven’t fared particularly well since then, down over 10% for March, but that’s likely more down to political turmoil.
Ford’s supercharges its EV goalsFord is making major moves on its EV division, boosting its spending by $20bn and kicking off a major restructuring.
- Ford is going full speed on EVs. The automaker said on Wednesday that it’s boosting spending on electric vehicles to $50bn through 2026 ($5bn of which will be this year), up from its previous $30bn pledge, and plans to produce over 2m EVs annually by then too.
- It’s all part of a massive overhaul of the business, which will see Ford split up its EVs and legacy autos into two separate units – a move it expects will maximize profits and streamline its growing EV biz, and which CEO Jim Farley called “one of the biggest changes in our history”.
- Farley has a plan to capture Tesla’s (TSLA) top spot, and this is a big step in that direction. The CEO threw some shade at the leading EV maker in his address on Wednesday, saying they are creating a new experience that will be better than Tesla’s. Investors seem to be on board, with shares surging over 8% on Wednesday.
“Caution, this stock is reversing”There are more than a few investor casualties after Ford’s fourth quarter reveals “persistent supply-chain disruptions”.
- It missed expectations by a mile with EPS of $0.26 (nearly half of the $0.45 expected) on revenues of $35.3bn (buoyed by the $8.2bn it pulled in from its stake in Rivian). The stock backtracked 10% in Friday morning trading to hit a three-month low.
- It failed to meet its production targets thanks to ongoing supply chain shortages, meaning wholesale deliveries dropped 11% to only 1.1m vehicles in Q4, and FY 2021 sales dropped 6.8% y-o-y.
- Guidance was good, but apparently not good enough. It estimated up to $12.5bn in revenue for 2022, up 25% and beating expectations. But, its swivel to EVs is putting pressure on cash flow, which investors aren’t chuffed about.
Andre Tan / Unsplash
Ford feels the loveFord is full speed ahead with new releases, and consumers are gobbling up everything they’re given.
- It had to stop taking orders for its hybrid Maverick pickup because so many people want one that production can’t keep up with demand – it stopped taking orders for its electric pickup in December for the same reason.
- While high demand is great, the chip shortage is making it hard to meet. The automaker has already partnered with GlobalFoundries to develop domestic semiconductor chip production.
- Ford’s EV push means it’s started trading as an EV stock, seeing losses of 18% last week as a deep tech rout took down the likes of Tesla (TSLA), Nio (NIO) and Nikola (NKLA).
Ford earns its StripesFord is giving its e-commerce capabilities a service, hoping it’ll accelerate its recent successes.
- Ford has inked a deal with Stripe, a popular payments processor, to spend the next five years facilitating the transformation of its e-commerce and payments infrastructure.
- It’s making changes on all corners of the street. It recently made a deal with Amazon (AMZN) to install FireTV into its 2022 SUVs.
- It once again all goes back to its Ford+ restructuring plan, which focuses on electrification and growth and has been a main driver of a bull run that’s added nearly 95% to the stock since September.
Deva Darshan / Unsplash
A tour of the $100bn clubFord donned its best tyres for a visit to the $100bn car club – but will it be invited back as a full time member?
- Ford spiked nearly 6% on Thursday, closing above $25 for the first time since 2001. It’s in the midst of a five month winning streak that’s added 92% to prices since September.
- Its market cap briefly spiked past $100bn for the first time, leaving rival GM (GM) in its dust with a $88bn market cap – though there’s a few miles to go before overtaking Tesla (TSLA).
- The gains have been fuelled by CEO Jim Farley’s EV push, which has seen the automaker double its electric pickup production thanks to crazy demand.
Rafal Jedrzejek / Unsplash
On track to the topFord CEO Jim Farley’s dream of taking over the EV market is getting closer to reality after a “truly breakthrough year” for the stock.
- Prices jumped nearly 5% on Monday to start the year at a new all-time high in celebration of its record-breaking 2021.
- Gains of 136% in 2021 made Ford the auto industry’s top growth stock for the year, easily outpacing top dog Tesla’s (TSLA) increase of under 47%.
- CEO Jim Farley and his Ford+ Turnaround Plan have been a gamechanger for the stock, with prices increasing over 200% since he took the reins in October 2020.
Simon Fitall / Unsplash
Ford is fired upDemand for Ford’s new electric pickup is flying off the charts, taking share prices along for the ride.
- Ford cruised up 9.61% on Friday to hit its highest price since August 2001.
- It had to stop taking reservations for its F-150 Lightning electric truck because it’s so popular. It stopped taking orders at 200k, and hopes to double its original production target of 80k.
- “Second place is the first loser”. CEO Jim Farley is determined to tackle EV giant Tesla, and wants to make 600k EVs by 2023.
Trying to topple a $1tn giantMorgan Stanley (MS) thinks Ford could beat out GM (GM) in 2021 deliveries, but is it enough leave Tesla in its dust?
- Prices popped over 2% on Wednesday, starting December with a bang after gaining 12% last month.
- Ford is on track to out-sell GM (GM) with its EVs this year, according to Morgan Stanley (MS). It’s only because GM are dealing with a recall though, so it’ll be back with a vengeance next year.
- Both are piling money into their EV efforts. Ford’s CEO wants it to be the world’s second biggest EV maker in the next few years.
We aim to become the 2nd biggest EV producer within the next couple years.
Then as the huge investments we're making in EV and battery manufacturing come onstream and we rapidly expand our EV lineup, our ambition is for
to become the biggest EV maker in the world.
Pulling the plug on the Rivian dealFord and Rivian divorce on their deal to make a new EV baby together.
- The pair have been working on a collaboration since 2019 when Ford invested $500m into Rivian – its 12% stake is now worth over $10bn after a supercharged IPO.
- There’ve been a few bumps along the way. They scrapped plans to make an electric Ford Lincoln together in October.
- Ford recently doubled its EV production goals for 2023 (to 600,000 cars) and signed a new deal with semi-chip giant GlobalFoundries.
Illustration by TradingView
Ford’s powerful EV newsFord is leaving the chip shortage in the dust with a new deal.
- Ford inks a deal with GlobalFoundries for the development and production of semiconductor chips for its vehicles.
- The company managed to sidestep the shortage in Q3, according to its recent earnings beat, though deliveries are still facing severe delays.
- CEO Jim Farley has big dreams of becoming the world’s biggest electric car maker, producing 600,000 EVs a year by 2023. However, analysts think he’s being a bit ambitious.
It's a big moment for the auto industry. Early EVs were good for the environment, but lacked emotion. Like appliances. That's changing.
's bet is different. We're taking iconic vehicles—Mustang, F-150, E-Transit—and making them even better as EVs. And more are on the way.