Ford Motor Co.’s first quarter performance has been splendid, outperforming industry analysts’ estimates. Ford’s Q1 earnings divulged that the automaker’s first-quarter revenue stood at $39.09 billion in contrast to Wall Street’s estimates of $36.08 billion. The stellar Q1 earnings report of Ford has been protracting on its fleet and legacy truck divisions, despite a significant beat in growing losses in Ford’s electric vehicles. Ford reiterated its 2023 guidance of adjusted earnings ranging between $9 billion and $11 billion.
The automaker’s $3 billion expected losses from Ford’s EV segment were washed out by the company’s traditional car operations, Ford Blue which earned $2.6 billion and its fleet operations, Ford Pro which earned $1.4 billion. Whilst ramping up EV production investments with a one-off charge in Rivian, Ford’s first-quarter financials reported a net income of $1.8 billion against a net loss of $3.1 billion last year.
“Ford Motor Co. experienced a solid quarter while making significant progress in the Ford+ growth plan. We hope to be boringly predictable with execution and delivering financials, but ambitious in dynamically creating the Ford of the future.”
– CEO Farley
John Lawler, the automaker’s finance chief, claimed that Ford’s Q1 earnings were just a ‘peek’ at the possibilities of generating growth and value. CEO Jim Farley previously disclosed that the company had failed to capitalize on additional profits of $2 billion in 2022 due to execution issues.
Ford’s Q1 Earnings: What’s Next In Ford EV?
Wall Street had been eagle-eyeing Ford’s Model e EV unit after Elon Musk’s Tesla reported several price revisions this year, cutting a few prices whilst raising some. Ford announced that it was again slashing the prices of its electric Mustang Mach-E by thousands, after effecting a price change of $600 in January. Ford’s Q1 2023 earnings prompted an increase in production of the crossover and also the reopening of order banks for the vehicle.
“It’s a competitive segment and we’re working on cost reductions.”
The automaker expects an average of $5,000 in build-cost reductions, owing to the switch from lithium-ion batteries to lithium-iron phosphate ones. Lawler additionally said that Ford will be continuing to maintain its stance on reporting a positive EBIT margin of 8 percent for Model e by the end of 2026, which includes the first-generation EVs by 2024.
Ford’s total revenue grew 20 percent year-over-year to $41.5 billion, which included the Ford Credit’s impact. Lawler enunciated that the company will have ‘definite’ pressure on the pricing of Ford’s legacy operations when demand and supply normalize.
The automaker’s contemporary, General Motors’ financial result and guidance raise was an incredible feat. Yet, its shares collapsed notably, making Wall Street analysts skeptical of the automotive industry’s performance amid broader economic challenges which are pulling the pricey vehicles and record profits, away from the normal footing.
On a final note, industry-wide automakers are bidding to bring a semblance of balance between their growth and earnings potential for EVs. Like other companies’ strategies, Ford will need to arrive at a decisive note on the kind of strategy it intends to pursue – growing fast and burning cash or focusing on an approach that provides priority to capital discipline.
