Ford Suffers $4.5 Billion Setback Amid Tesla's Aggressive Pricing
- Ford's EV division is expected to lose $4.5 billion this year, $1.5 billion more than anticipated, with the division already reporting a loss of $1.8 billion this year, compared to last year's $2.1 billion loss.
- Due to an industry-wide price war for EVs, led by Tesla, Ford is reassessing its EV production schedule and spending plans, pulling back on its initial production ramp-up and predicting a delay in reaching its annual production target of 600,000 EVs.
- Ford has raised its guidance and reported strong earnings, with the CEO attributing the company's resilience to its shift towards digital experiences and EVs.Join Our Community
As we first noted last week, Ford is slated to lose $4.5 billion from its EV segment this year, a $1.5 billion larger loss than the company had expected.
So far this year, the division has lost $1.8 billion and this year's $4.5 billion loss figure blows away last year's $2.1 billion loss. Ford also announced that its electric F-150 pickup trucks will undergo a price cut, according to Fox.
Ford beat earnings on Thursday and reported adjusted EPS of $0.72, beating expectations of $0.54. It posted revenue of $45 billion and adjusted EBITDA of $3.8 billion, above estimates of $3.15 billion. We detailed analyst takes on the report late last week in this piece.
The company also raised its guidance, forecasting adjusted EBIT of $11 billion to $12 billion from $9 billion to $11 billion. The company is now guiding for free cash flow of $6.5 billion to $7 billion, from $6 billion.
But reality has sunk in about the company's comments regarding its EV production schedule and spending plans. Price cuts in the industry, led by Elon Musk and Tesla, have thrown Ford's production targets into a tailspin and Morgan Stanley noted on Friday morning that "major changes to the EV strategy" could be necessary, according to a wrap up by Bloomberg.
Ford now says it is "throttling back" on plans to ramp up EV production, the wrap up said. It blamed the price war for EVs as part of the cause and told shareholders it would need another year to meet its target of 600,000 EVs produced annually.
Ford CEO Jim Farley said late last week: "The shift to powerful digital experiences and breakthrough EVs is underway and going to be volatile, so being able to guide customers through and adapt to the pace of adoption are big advantages for us. Ford+ is making us more resilient, efficient and profitable, which you can see in Ford Pro's breakout second-quarter revenue improvement (22%) and EBIT margin (15%)."
CFO John Lawler said yesterday that the company "has ample resources to simultaneously fund disciplined investment in growth and return capital to shareholders – for the latter, targeting 40% to 50% of adjusted free cash flow," Bloomberg added. He now says Ford is "not providing a date" for producing 2 million EVs per year, which was previously the company's target for 2026.
Ford's inability to compete with Tesla was noted earlier this year in a piece titled Tesla 'Weaponizes' Price-Cuts To Crush EV Competition.
Is the company pulling an Intel and "kitchen sinking" its guide for the year, or has Elon Musk's price cuts over at Tesla really put the legacy automaker on the ropes? Ford reports again on October 26, where we'll get our next glimpse into its continuing operations this year.
By Zerohedge.com
Tesla, Ford, And GMC Are Racing To Capture The EV Truck Market
- Production has started on Tesla's Cybertruck at its Gigafactory in Austin, Texas, following on from other automakers like Ford, GMC, and RAM who have already released electric truck models.
- Besides established brands, start-ups such as Rivian and Telo are entering the market with innovative EV truck designs, promising impressive speed, range, and load-carrying capabilities.
- Chinese automakers are preparing to compete in the EV truck market, with Zhejiang Geely Holding Group announcing the first batch of its Radar RD6 EV pickup truck ready for export, at a more affordable price than many American models.Join Our Community
As the electric vehicles (EV) car market booms, automakers are looking to expand their ranges to include electric trucks. Consumer interest in electric trucks has been about as strong as the offering, limited due to the low distance range and long recharging times involved. However, several car manufacturers now have big plans to bring impressive new electric truck models to the market over the next year in a bid to reach a broader market.
This month, production started on EV giant Tesla’s Cybertruck, almost three years after the announcement that the automaker planned to produce a pickup truck model. The Cybertruck will be produced in Tesla’s Gigafactory in Austin, Texas and a first glimpse of the truck was provided by CEO Elon Musk when he released footage driving around the city. The Giga Texas facility is built on 2,500 acres, with 10 million square feet of manufacturing space.
So far, Tesla says it’s received reservations for over 1.5 million Cybertrucks, costing just $100 per reservation. The projected number of sales is therefore uncertain at present. Despite leading in the world of EVs, Tesla is now catching up to the truck offerings of other automakers, such as Ford’s F-150 Lightening. Ford began producing its EV truck in 2021, receiving positive consumer interest and good reviews to date. Other big truck makers, including Rivian, GMC, and RAM, also have plans to release highly-competitive electric truck models, meaning the long-awaited Cybertruck will have a lot to prove. The final price of the truck has not been released yet, although it was originally expected to be sold at $39,900 for the single-motor variant and around $70,000 for the three-motor option. There were also rumours that the pickup might be built using bullet-proof glass.
With production well underway, Ford uses the same model as the best-selling vehicle on the North American market for the last four decades for its first electric pickup offering, the F-150. Tens of thousands of people across the U.S. have made reservations for the truck since 2021. Ford claims it has a range of 320 miles, with capabilities of powering other equipment, such as tools, and the ability to tow 4.5 tonnes. It will cost consumers anywhere between $60,000 and $100,000.
And it’s not only well-known automakers that are getting in on the competition, with many start-ups developing new, innovative lines of EVs. U.S. consumers may opt for the Rivian R1T, a model that’s currently in production by start-up Rivian. The truck is expected to achieve a range of around 300 miles and is capable of 0-60 mph in around 3 seconds. It is also thought to be able to move through over 90cm of water and tow up to 5 tonnes. The pickup will cost buyers around $73,000. Rivian is also producing a 7-seat version of the SUV.
Alternatively, Telo, a U.S.-based start-up, thinks it can offer consumers something different with its small modular electric truck. Telo claims its truck has “Toyota Tacoma capability,” but is around the same size as a Mini Cooper, at 152 inches. As it has no engine, the truck is made more compact, with batteries stored in the floor and motors. The Telo can accelerate from 0-60 mph in around 4 seconds, has a top speed of 125 mph, and has a range of around 350 miles. The company uses space wisely, meaning despite being compact it can seat five passengers or be rearranged to carry heavy and bulky items. Right now, the Telo is still in the prototype phase, but it could provide a blueprint for the future of electric trucks, something more practical and compact with all the capabilities of a traditional pickup.
While U.S. automakers are rising fast in the world of EV trucks, they are once again facing staunch competition from Asia. Several Chinese car manufacturers – many of which are already leading in the EV market – have announced plans to release electric trucks that could compete with offerings from well-known automakers. Chinese company the Zhejiang Geely Holding Group announced this month that the first batch of its Radar RD6 EV pickup truck is now ready for export. The Geely Group is the parent company and co-owners of several major car brands including Volvo, Polestar, ZEEKr, and Lotus. The RD6 starts at a much more affordable $25,000, with China continuing to lead on lost-cost EVs. Geely expects to roll out a whole range of electric lifestyle vehicles, including pickup trucks, SUVs, and ATVs in the coming years.
With Tesla expected to bring its Cybertruck to the market within the next year, consumers are increasingly looking to the future of electric trucking. Several major U.S. automakers have already started producing their electric truck ranges and smaller start-ups are not far behind. To add to the competition, China continues to surprise the auto world by producing impressive EV models at much lower prices than their American counterparts, suggesting the Chinese hold on the U.S. EV market could grow over the next decade.
By Felicity Bradstock for Oilprice.com
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