• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 3 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 8 days How Far Have We Really Gotten With Alternative Energy
ZeroHedge

ZeroHedge

The leading economics blog online covering financial issues, geopolitics and trading.

More Info

Premium Content

Ford Suffers $4.5 Billion Setback Amid Tesla's Aggressive Pricing

  • Ford's EV division is expected to lose $4.5 billion this year, $1.5 billion more than anticipated, with the division already reporting a loss of $1.8 billion this year, compared to last year's $2.1 billion loss.
  • Due to an industry-wide price war for EVs, led by Tesla, Ford is reassessing its EV production schedule and spending plans, pulling back on its initial production ramp-up and predicting a delay in reaching its annual production target of 600,000 EVs.
  • Ford has raised its guidance and reported strong earnings, with the CEO attributing the company's resilience to its shift towards digital experiences and EVs.

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, according to Fox.

Ford beat earnings on Thursday and reported adjusted EPS of $0.72, beating expectations of $0.54. It posted revenue of $45 billion and adjusted EBITDA of $3.8 billion, above estimates of $3.15 billion. We detailed analyst takes on the report late last week in this piece

The company also raised its guidance, forecasting adjusted EBIT of $11 billion to $12 billion from $9 billion to $11 billion. The company is now guiding for free cash flow of $6.5 billion to $7 billion, from $6 billion. 

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%)."

CFO John Lawler said yesterday that the company "has ample resources to simultaneously fund disciplined investment in growth and return capital to shareholders – for the latter, targeting 40% to 50% of adjusted free cash flow," Bloomberg added. He now says Ford is "not providing a date" for producing 2 million EVs per year, which was previously the company's target for 2026. 

Ford's inability to compete with Tesla was noted earlier this year in a piece titled Tesla 'Weaponizes' Price-Cuts To Crush EV Competition

Is the company pulling an Intel and "kitchen sinking" its guide for the year, or has Elon Musk's price cuts over at Tesla really put the legacy automaker on the ropes? Ford reports again on October 26, where we'll get our next glimpse into its continuing operations this year. 

ADVERTISEMENT

By Zerohedge.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Rich Stanton on July 31 2023 said:
    It's hard to believe Tesla is still able to sell "cars" at any price anymore. Tesla hasn't been an innovator for years, and Cybertruck idiocy aside the Teslas people have owned for years are pretty much the same as new Teslas will be years from now.

    Regarding the Cybertruck, anyone who owns a truck knows the Cybertruck is just a joke, the only people who will buy it are social media so-called "influencers" and Teslas fanbois. The first production run will likely be it's last.

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News