Ford Motor Company (F) has revised its 2024 earnings expectations, forecasting a full-year EBIT of $10 billion, now at the lower end of its original guidance range of $10 billion to $12 billion.
This adjustment reflects the impact of ongoing pricing challenges in the competitive electric vehicle (EV) market, which has led to a 5% drop in Ford’s stock during after-hours trading.
CEO Jim Farley highlighted that Ford is navigating a “global price war,” exacerbated by increased EV production capacity, regulatory pressures, and a flood of new EV models.
By contrast, Ford’s top rival, General Motors (GM), recently reported stronger-than-expected third-quarter earnings and projected consistent profits into 2025.
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Ford’s $900M Profit in Q3 Shows Resilience, Beats Expectations
Despite several headwinds, the company’s third-quarter results showed resilience. The automaker posted net income of $900 million, or 22 cents per share, down from 30 cents per share a year ago but above market expectations.
This quarter included a $1 billion cost associated with halting production of a planned three-row electric SUV. Ford’s adjusted earnings per share came in at 49 cents, slightly surpassing analyst estimates of 47 cents, based on data compiled by LSEG.
Traditional gas-powered vehicles and Ford’s commercial divisions remained solid contributors, generating $3.4 billion in combined EBIT.
Inventory levels, however, were elevated, with Ford ending the quarter with 91 days of gross stock and 68 days of dealer stock.
Ford Faces $5B EV Loss as Competition Heats Up Against Tesla and Chinese Rivals
Ford’s EV strategy has seen significant adjustments as the company confronts a challenging competitive environment marked by aggressive moves from Tesla (TSLA) and new entrants from China.
Farley announced the cancellation of Ford’s highly anticipated three-row electric SUV, admitting the model could not meet the company’s profitability goals within the required timeline.
The company’s goal remains to ensure that new EV models become profitable within the first year of production.
Ford’s EV segment continues to weigh on overall profitability, with projected losses reaching $5 billion for 2024.
The automaker recorded a $1.2 billion EBIT loss in its EV division during the third quarter, bringing its year-to-date EV losses to $3.7 billion.
Ford has achieved around $1 billion in cost savings through streamlined operations, but these improvements have been countered by persistent pricing pressures across the industry.
Cost Reductions and Strategic Realignment at the Core of Ford’s Growth Plan
Chief Financial Officer John Lawler expects EV pricing competition to intensify through 2026 as more models enter the market.
It’s going to be a very competitive market and that’s what we need to be prepared for,”
Ford CFO, John Lawler
To address these pressures, Ford aims to cut $2 billion annually in materials, manufacturing, and freight costs, while also managing rising labor expenses from its recent UAW union agreement.
As Ford Motor Company continues to navigate an evolving automotive landscape, the company’s focus on managing costs and refining its EV strategy is critical to maintaining competitiveness and shareholder value.
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