For the first time in its 120-year history, Ford Motor Co. reported quarterly earnings Tuesday by its three key business units instead of by regions, such as North America, in an attempt to show investors how the company is preparing for more aggressive competition as the industry moves into all-electric vehicles.
Ford CEO Jim Farley divided the company a year ago into Ford Blue (gas, hybrid), Ford Model e (electric vehicles) and Ford Pro (commercial products). Ford has already revealed it’s planning to lose billions of dollars during the transition to battery-operated vehicles, and the first quarter reflected a more than $700 million loss for Model e. When characterizing the effort as more like a start-up, Farley and Chief Financial Officer John Lawler play into the reality that all start-ups lose money in the beginning, from Amazon to Tesla.
“We plan to be surgical,” Farley told industry analysts in the earnings call, adding later, “We are pleased but we are not satisfied.”
First quarter 2023 earnings highlights
- Ford Motor Co. reported $3.4 billion in earnings before interest and taxes for the first three months of this year, a dramatic contrast to one year ago when the company reported $2.3 billion in earnings.
- A net gain of $1.8 billion after a net loss of $3.1 billion in first quarter 2022, primarily attributable to the value of its investment in the start-up electric vehicle maker Rivian.
- $41.5 billion in revenue for first quarter this year, up 20%, compared with $34.5 billion in 2022.
- Ford ended the quarter with $29 billion in cash on hand, $46 billion in liquidity.
- Ford Credit earned $303 million, compared with $928 million for the same quarter in 2022
- Ford Pro earnings before interest and taxes nearly tripled to $1.4 billion, Ford Blue doubled to $2.6 billion
- Model e earnings reflected a loss of $722 million for this quarter.
Action taken before earnings
Early Tuesday, Ford revealed its plan to slash prices a second time in four months on the Mach-E, a direct competitor of the Tesla Model Y. With order banks reopening, and a factory in Mexico overhauled to dramatically increase production more efficiently, Ford said it can afford to cut prices in an attempt to grow market share.
What executives have to say
Ford Chief Financial Officer John Lawler told reporters in a conference call that the new process is “sharpening our focus, speed and accountability” that has resulted in “solid” results this quarter.
The company spent billions on electrification last year and expects to do the same this year, which Ford views as investment. Ford Mode e isn’t profitable yet but Model e is on track to break even on its first-generation EVs by the end of 2024, Lawler said.
He said the EV landscape is competitive and, once people buy a brand, they tend to stick with it. That’s why Ford is focused on capturing EV consumers early in the game, he said.
Farley said in a news release that running the company on behalf of distinct customer groups produced “solid operating results and a glimpse of the promise of its new plan. “Ford Model e’s different approach to EVs is significantly reducing costs on our first high-volume products while rapidly developing breakthrough next-generation vehicles from the ground up.”
Big fat average transaction prices
Ford’s market share is essentially static but transaction prices are not, according to Cox Automotive research released Tuesday:
- Ford’s total sales grew nearly 10%, higher than 8% for the industry
- Ford gained 0.29 percentage points of market share, increasing its total share to 13.7% or comparable to 2021.
- The Ford brand market share came in at 12.6%, up 0.34 percentage points. Lincoln’s share was 0.5%, off only 0.05 percentage point compared with a year ago.
- Ford’s total average transaction price climbed by 13% to a new high of $55,711 this first quarter.
- The Ford brand saw prices up nearly 13% to $55,149, spurred by the Transit commercial van, up 18% to $57,041.
- Bronco was up 10% to $57,012, while F-Series was up 7% to $65,727
- The Mustang Mach-E had an average transaction price of $61,941 in first quarter.
- Lincoln’s average transaction price climbed 13% to $69,158. The Navigator had the biggest percentage increase, up 8% to $105,291, the first time ever ATPs were over $100,000 in first quarter. The Corsair was down 2% to $45,565.
- Ford, overall, cut incentives by 3% to an average of $1,209 per vehicle. The Ford brand cut incentives by more than 35% to an average of $1,139 per vehicle, the lowest in years. Before the chip shortage, the Ford brand typically spent more than $3,000 per vehicle on incentives.
- Lincoln cut incentives by 19% to an average of $2,882 per vehicle, also the lowest in years by a wide margin. Before the chip shortage, Lincoln typically spent an average of more than $7,000 on incentives per vehicle.
Earnings reaction
Garrett Nelson, senior equity analyst at CFRA Research, released a note Tuesday recommending that investors buy Ford stock. He called first quarter earnings “much stronger than expected.”
GM sees a dip
On April 25, General Motors reported a pretax profit of $3.8 billion or a decline of 6% from a year ago, part from the costly rollout of electric vehicles and production hiccups related to parts shortages. GM took a $994 million charge to pay for its salaried employee buyouts and its program to buy out Buick dealers who do not want to sell EVs.
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Contact Phoebe Wall Howard: 313-618-1034 or phoward@freepress.com. Follow her on Twitter @phoebesaid