Ford's 2023 forecast withdrawn, higher losses predicted for EVs

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【Summary】Ford Motor Co has withdrawn its 2023 forecast and warned of higher losses on electric vehicles (EVs) due to the pending ratification of its deal with the United Auto Workers union. The company will delay some of its planned investments in new EV production capacity, citing downward pressure on prices. Ford's EV unit posted a higher-than-expected loss of $1.3 billion, and the company is forecasting a full-year loss of $4.5 billion for its Ford Model e unit.

FutureCar Staff Oct 26, 2023 11:18 PM PT

Ford's 2023 forecast withdrawn, higher losses predicted for EVs

Ford Motor Co has withdrawn its full-year results forecast and warned of higher losses on electric vehicles due to the pending ratification of its deal with the United Auto Workers (UAW) union. This news caused shares of the company to drop nearly 5% after-hours. The tentative agreement reached between the union and Ford includes a 25% wage hike for 57,000 workers over 4-1/2 years, effectively ending a strike at some of the automaker's largest factories.

During a media briefing, Ford Chief Financial Officer John Lawler stated that the company will be delaying some of its planned multibillion-dollar investment in new EV production capacity. Lawler cited "tremendous downward pressure" on prices as the reason for this decision. Like its competitors, Ford is grappling with finding the right balance between price, margin, and EV demand.

Ford's rival, General Motors, also withdrew its 2023 results forecast and announced a one-year delay in the opening of an electric truck plant in Michigan. 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, amounting to $1.3 billion. Ford has projected a full-year loss of $4.5 billion for its Ford Model e unit.

The automaker revealed that its EV business is facing "sharply compressed" prices and profitability. Customers are not willing to pay a premium for EVs compared to comparable combustion and hybrid models. Despite these challenges, Ford's third-quarter revenue saw an 11% increase to $44 billion, with a profit of $1.2 billion, compared to a loss of $827 million in the same period last year.

Furthermore, Ford's Ford Pro commercial vehicle business and Ford Blue combustion and hybrid vehicle business both experienced 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 now reached $9.3 billion.