Today: 14-04-2024

Electrifying Controversy: Navigating Ford's Unconventional Path in the Electric Drive Revolution

"Ford's Electric Drive Faces Uphill Battle Amidst Profit Pressures

NEW YORK, Oct 26 (Reuters Breakingviews) — Ford Motor (F.N) appears to have tackled its labor woes, but a more formidable challenge looms, impervious to negotiations. Despite its gas-burning vehicles still commanding higher prices, Ford's recent results reveal a gasping operating profit, trailing nearly 9% below expectations, as reported by LSEG data. In a familiar trend reminiscent of cross-town rival General Motors (GM.N), the volatility of fossil-fuel fortunes persists. However, the red ink generated by Ford's electric-car pivot is reaching unprecedented depths.

The company, initially on track to meet full-year profit forecasts, faced setbacks with strikes idling factories, incurring $1.3 billion in costs. CEO Jim Farley, compelled to abandon profit forecasts, also had to shelve plans and delay electric-vehicle production targets. Even the highly anticipated F-150 Lightning, hailed as a silver bullet for traditional automakers, suffered a 46% YoY sales decline in Q3, according to Cox Automotive.

While electric-vehicle growth is slowing industry-wide, Ford's pursuit of profitable sales is currently heading in the wrong direction. The electric division reported an alarming $37,000 operating loss per battery-powered vehicle this quarter, marking a 51% deterioration from the previous year. In contrast, electric pick-up startup Rivian Automotive (RIVN.O), lacking Ford's extensive car-making experience, managed to halve its gross losses per vehicle for two consecutive quarters.

As electric vehicle prices plummet, Ford faces the stark reality of grinding down costs to stay competitive. With its century-plus legacy, the automaker is navigating uncharted territory, and the road ahead is proving more challenging than anticipated.

(By Jonathan Guilford) Follow @Breakingviews on X (The author is a Reuters Breakingviews columnist. The opinions expressed are their own. Adds Byline)

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Editing by Lauren Silva Laughlin and Aditya Sriwatsav

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"In conclusion, Ford Motor's recent challenges, from labor disruptions to a sluggish operating profit, underscore the complexities of its ambitious electric-car pivot. The setbacks, including strikes, delayed production targets, and the underwhelming performance of the F-150 Lightning, have cast a shadow on the company's initial trajectory toward meeting full-year profit guidance.

The electric-vehicle market, experiencing a broader slowdown, has posed a unique hurdle for Ford, whose electric division recorded significant operating losses per vehicle sold. In contrast to competitors like Rivian Automotive, Ford's century-plus legacy in car-making has not shielded it from the evolving dynamics of the industry. As electric vehicle prices decline, the urgency for Ford lies in efficiently managing costs to remain competitive in an increasingly challenging landscape.

The road ahead for Ford's electric drive is uncertain, requiring strategic adaptations and cost-efficiency measures. With industry dynamics evolving rapidly, Ford faces the formidable task of aligning its electric ambitions with market realities to ensure a sustainable and profitable future in the ever-changing automotive landscape."