In the past quarter, the U.S. automaker Ford recorded a loss of $1.14 billion in the electric vehicle sector. This significantly contributed to the company's net profit falling by nine percent year-over-year to $1.83 billion, despite profitable combustion models and commercial vehicles. Analysts had expected higher profitability. On Thursday, Ford's stock fell by 18.40 percent to $11.16 at the New York Stock Exchange.
Ford's CFO John Lawler admitted that significant efforts are still necessary to improve quality and reduce costs and complexity. In a conference call, he explained that warranty costs had increased by $800 million compared to the first quarter, mainly due to models from the 2021 model year and earlier.
Quality problems have long been a challenge for Ford. Group CEO Jim Farley emphasized that these issues represent a significant cost disadvantage compared to competitors. Last year, Ford had to spend $4.8 billion on repairs for customer vehicles. In the spring, the company halted the delivery of 60,000 F-150 pickup trucks for additional quality inspections, which, according to Farley, prevented recalls and is now set to become the standard procedure.
According to Philippe Houchois, an analyst at Jefferies, experts had hoped for a better operating result (adjusted Ebit). But Ford stuck to its previous outlook and gave no indication that the company sees the forecast at the upper end of the range.
The quarterly revenue increased by six percent to $47.8 billion (€44 billion). During the COVID-19 pandemic, Ford and other US car manufacturers made significant investments to catch up with electric car pioneer Tesla. Now the new capacities have been built, but the interest of buyers in electric cars has significantly decreased. For the entire year, Ford expects an operating loss of $5 to $5.5 billion in the electric car segment.
Instead, hybrid vehicles have become more popular in the USA. Ford sold 34 percent more hybrid vehicles in the past quarter, which now make up around nine percent of the company's global sales.
In addition to the disappointing Ford figures, negative statements from European rival Stellantis also contributed to the gloomy mood in the automotive sector. The half-year results from French manufacturer Renault also led to significant stock losses.
Ford faces significant challenges, particularly in the electric vehicles sector, where substantial losses are being recorded. Quality issues and rising warranty costs are further straining the financials. At the same time, there is a shift towards hybrid vehicles, which might provide some relief. The coming months will be crucial for Ford to determine if it can achieve its goals and address the ongoing problems.
