Ford's 2023 forecast retracted, higher losses anticipated for EVs.

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【Summary】Ford Motor Co has withdrawn its full-year forecast and warned of higher losses on electric vehicles (EVs) due to the pending ratification of its deal with the United Auto Workers (UAW) union. The company cited "tremendous downward pressure" on prices and a need to balance price, margin, and EV demand. Ford's EV unit posted a higher-than-expected loss of $1.3 billion, and customers were not willing to pay a premium for EVs.

FutureCar Staff Oct 27, 2023 6:24 AM PT

Ford's 2023 forecast retracted, higher losses anticipated for EVs.

Ford Motor Co announced on Thursday that it was withdrawing its full-year results forecast due to the pending ratification of its deal with the United Auto Workers (UAW) union. The company also warned of higher losses on electric vehicles, which caused its shares to drop nearly 5% after-hours.

The UAW and Ford reached a tentative agreement on Wednesday, ending a strike at some of the automaker's biggest factories. The agreement includes a 25% wage hike for 57,000 workers over 4-1/2 years.

During a media briefing, Ford Chief Financial Officer John Lawler stated that the company would delay some of its planned multibillion-dollar investment in new EV production capacity. This decision was made due to the "tremendous downward pressure" on prices.

Lawler mentioned that Ford, like many of its competitors, is trying to find the right balance between price, margin, and EV demand.

General Motors also withdrew its 2023 results forecast earlier this week and postponed the opening of an electric truck plant in Michigan by a year, following similar challenges in the EV market.

Ford's adjusted third-quarter earnings per share of 39 cents fell short of the Wall Street average target of 45 cents. The company's EV unit reported a higher-than-expected loss in earnings before interest and taxes of $1.3 billion. Ford has forecast a full-year loss of $4.5 billion for the Ford Model e unit.

The automaker explained that its EV business was facing "sharply compressed" prices and profitability. It also noted that customers were not willing to pay a premium for EVs over comparable combustion and hybrid models.

Despite these challenges, Ford's third-quarter revenue rose 11% to $44 billion, with a profit of $1.2 billion compared to a year-earlier loss of $827 million. The company's Ford Pro commercial vehicle business and Ford Blue combustion and hybrid vehicle business both posted higher year-on-year revenue, EBIT, and EBIT margins.

According to consultancy Anderson Economic Group, the total economic loss from the strikes at the Detroit Three automakers has reached $9.3 billion.