Ford warns again on EV results, pulls back 2023 forecast

DETROIT, Oct 26 (Reuters) – Ford Motor Co ( FN ) on Thursday withdrew its full-year results forecast as it warned of continued pressure due to “uncertainty” pending its contract with the United Auto Workers (UAW) union. Electric vehicles sent the company’s shares down more than 4% after hours.

The union and Ford on Wednesday reached a tentative agreement that includes a 25% pay raise for 57,000 workers over 4-1/2 years, ending a strike at some of the automaker’s largest factories.

Ford expects the new deal to add $850 to $900 to labor costs per vehicle, Chief Financial Officer John Lawler said at a conference Thursday.

The company’s offers are significant, CFRA Research analyst Garrett Nelson said in an investor note on Thursday. “They will weigh on its competitiveness at the margins compared to Tesla and other non-union automakers.”

Ford’s growing concern over cooling EV demand follows rival General Motors’ ( GM.N ) decision earlier this week to postpone a $4 billion electric truck plant in Michigan.

Lawler reiterated that Ford would delay a planned multibillion-dollar investment in new EV and battery manufacturing capacity, citing “enormous downward pressure” on prices.

Ford lost $36,000 on each of the 36,000 electric vehicles it delivered to dealers this quarter — an estimated loss of $32,350 per EV in the second quarter.

During Ford’s second-quarter earnings conference in July, CEO Jim Farley cited plans to slow the pace of money-losing EVs, shift investment to Ford’s commercial vehicle unit and quadruple sales of gas-electric hybrids. The next five years.

Like many of its competitors, Ford is “trying to find a balance between price, margin and EV demand,” Lawler said Thursday. For consumers, Farley added, “affordability is an issue.”

GM pulled back its 2023 results forecast earlier this week, and pulled back its oft-repeated expectations to build 400,000 EVs by mid-2024.

Ford’s adjusted third-quarter earnings of 39 cents missed the Wall Street average target of 45 cents, according to LSEG data.

Revenue excluding Ford Credit of $41.18 billion was slightly shy of Wall Street forecasts of $41.22 billion, according to LSEG data.

Ford posted a $1.3 billion loss in earnings before interest and taxes on its EV unit, bringing its nine-month EBIT loss to $3.1 billion. The company forecast a full-year loss of $4.5 billion for the Ford Model e unit.

The automaker said its EV business was experiencing “severely compressed” prices and profits, and added that customers were unwilling to pay a premium for EVs over comparable combustion and hybrid models.

Ford’s third-quarter profit was $1.2 billion, compared with a year-ago loss of $827 million. Last year’s loss was a $2.7 billion write-off on Ford’s investment in the now-shuttered Argo automotive business.

The automaker said its Ford Pro commercial vehicle business and Ford Blue combustion and hybrid vehicle business both posted higher revenue, EBIT and EBIT margins year-over-year. Vehicle sales to dealers in both units were lower than a year ago.

Adjusted free cash flow fell to $1.2 billion from $3.6 billion a year ago.

(Reporting by Paul Lienert in Detroit and Nathan Gomez and Abhijith Ganabavaram in Bengaluru; Additional reporting by David Shepherdson in Washington; Editing by Devika Siamnath, Peter Henderson and Matthew Lewis)

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