Ford Records Losses on EV Division in Latest Earnings Beat, Stock Wobbles
Key takeaways
- Ford has reported a $1 billion loss on its EV division for Q2, with full-year losses set to widen
- The carmaker now expects EV production to hit 600,000 units a year later than originally planned
- Ford’s share price closed 4.4% down last week at the news
The car industry is having a tough time right now with high interest rates affecting sales, supply chain issues and a potential labor dispute. So it’s no wonder that even though Ford had a good earnings report for the second quarter, it was the bad EV news that investors latched onto — and the stock dipped. Here’s everything you need to know.
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What happened with Ford’s EV arm?
Ford already has skin in the EV game with the Ford F-150 Lightning and Mustang Mach-E models, but the carmaker is struggling to make its EV dreams a reality. For the second quarter, Ford’s EV division reported $1.8 billion in sales and an overall loss of $1 billion.
Ford CEO Jim Farley admitted it was taking longer than they’d hoped to get EVs off the ground. Ford is now targeting a 600,000 EV production rate by the end of 2024 instead of this year, and has abandoned its 2026 target of two million EVs in production.
While the loss was anticipated because EVs are more expensive to make, investors weren’t expecting a surprise update from Ford on its full-year guidance — it now expects to make a loss of $4.5 billion on its EV division, compared to the $3 billion the company initially forecasted. Yikes.
What was the market reaction?
The earnings beat was good — earnings per share and revenue smashed expectations, while Ford’s commercial and traditional car divisions performed well — but the widened losses for Ford’s EV division was enough to spook investors.
Ford’s share price closed 4.4% down on Friday, compared to the S&P 500 which gained 1.1% on the same day. Ford’s share price is up 14.7% this year. The EV news also prompted Ford bulls to turn into bears. One Jefferies analyst downgraded Ford stock from buy to hold and cut the share price guidance to $15, down from $17.
The bottom line
Ford clearly has a long way to go before it can call itself a full EV company — but with the competition hotting up in the U.S. and overseas, the legacy automaker is running out of time to prove it can make the transition smoothly and without any pain for shareholders.
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