Because of "uncertainty" surrounding the ratification of its agreement with the UAW union, Ford Motor withdrew its full-year results projection on Thursday. It also issued a warning about ongoing stress on EVs, which caused shares of the business to drop over 4% after hours.
A strike at some of Ford's largest factories came to an end on Wednesday when the carmaker and the union negotiated a tentative settlement including a 25% salary increase for 57,000 employees over 4 and 1/2 years.
CFO John Lawler of Ford stated in a conference on Thursday that the company anticipates an increase in labor costs of $850 to $900 for each vehicle under the new deal.
According to Garrett Nelson, An analyst of CFRA research, the corporation has made some important concessions, which will have an impact on profitability and competitiveness with Tesla as well as other non-union automakers.
Ford is growing more concerned about the decline in EV demand in response to General Motors' announcement earlier in this week that it would be delaying the opening of an electric truck factory in Michigan worth $4 billion.
Lawler reaffirmed Ford's decision to postpone some of its planned investment in further electric vehicle and also battery production facilities, citing severe downward price pressure.
Even more than its projected $32,350 loss per electric vehicle in the second quarter, Ford lost roughly $36,000 on every one of the 36,000 electric cars it supplied to dealers during the quarter.
CEO Jim Farley announced during Ford's July second-quarter earnings briefing that the firm would reduce the pace at which it ramps up the production of financially unsound electric vehicles, redirecting investment towards Ford's commercial vehicle division and announcing plans to treble sales of gas-electric hybrids during the following five years.
Lawler stated on Thursday that Ford, similar to many of its rivals, is attempting to strike a balance between pricing, margin, and the desire for electric vehicles. According to Farley, affordability is the issue for customers.
Earlier this week, GM also retracted its prediction for 2023 results and backed down from its frequently stated goal of producing 400,000 electric vehicles by the middle of 2024.
Based on LSEG statistics, Ford's adjusted earnings per share of 39 cents for the third quarter fell short of the Wall Street expectation of 45 cents.
LSEG data shows that revenue of 41.18 billion dollars, excluding Ford Credit, missed Wall Street estimates of 41.22 billion dollars.
According to Ford, its EV division reported a $1.3 billion loss of earnings before taxes and interest, increasing the company's 9-month EBIT deficit to 3.1 billion dollars. For the Ford Model e unit, the firm had projected a pretax loss of about 4.5 billion dollars for the entire year.
Customers would not pay more for EVs than equivalent combustion and hybrid cars, according to the automaker, which claimed that its EV division was seeing sharply reduced prices and profits.
Ford had a $1.2 billion profit in the third quarter of this year, up from an $827 million loss the previous year. A $2.7 billion non-cash writedown on Ford's stake in the now-closed Argo driverless car business was one of the losses from last year.
Adjusted free cash flow decreased to 1.2 billion dollars, from 3.6 billion in the prior year.