Ford: investment in electric cars causes us 4.5 billion in losses
Ford shares fell sharply early Friday after the automaker said its investment in electric vehicles could cost it $4.5 billion this year.
Simply put, it seems that the price war started by Elon Musk and Tesla in the world of electric vehicles has really hurt the competition.
Ford beat earnings forecasts Thursday and reported adjusted earnings per share (EPS) of $0.72, beating expectations by $0.54. It reported revenue of $45 billion and adjusted EBITDA of $3.8 billion, above estimates of $3.15 billion.
The company also raised its guidance, to an adjusted EBIT of $11-12 billion from $9-11 billion. The company now expects free cash flow of $6.5-7 billion, up from $6 billion.
So apparently all is well, too bad that the most innovative part of the company is the cause of big problems: the price cuts in the sector, led by Elon Musk and Tesla, have plunged Ford's production targets and Morgan Stanley noted Friday morning that “major changes to EV strategy” may be needed, Bloomberg reported.
Ford said it would "slow down" plans to ramp up EV production, the official statement read. Ford blamed the price war for EVs and told shareholders it needed another year to reach its goal of 600,000 EVs produced each year.
From the data obtained by the analysts, the profits were produced by the Ford Pro division, which mainly deals with commercial vehicles, and Ford Blue, which deals with advanced internal combustion engines, while the division that deals with electric vehicles is at a heavy loss . This leads to a slowdown in investments in this sector, which will hardly be able to reach its objectives due to price competition. Before being able to sell a good number of cars, it will be necessary to work, and a lot, on costs.
Chief Financial Officer John Lawler said yesterday that the firm “has ample resources to finance both disciplined investments in growth and return of capital to shareholders – for the latter target, 40%-50% of adjusted free cash flow. added Bloomberg. The chief financial officer says Ford is "not providing a date" for producing 2 million electric vehicles a year, which was previously set for 2026.
The electric one is therefore more of a ballast than an advantage for the big car manufacturers, as happened in Germany for Volkswagen. Doesn't this explain the nagging communication on climate change?
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The article Ford: investment in electric cars causes us 4.5 billion in losses comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/ford-linvestimento-nelle-auto-elettriche-ci-causa-45-miliardi-di-perdite/ on Fri, 28 Jul 2023 15:19:59 +0000.