DETROIT – Ford Motor Co.'s second-quarter profit more than tripled to $1.92 billion versus a year ago on strong internal combustion and commercial vehicle sales, but losses grew along with growing pains in the electric vehicle business.
Pretax losses at Model e, the EV business, topped $1 billion in the quarter, but they were more than offset by $2.3 billion in profits on internal combustion vehicles and $2.39 billion from commercial vehicles such as delivery vans.
Recommended Videos
The overall strong performance gave Ford the confidence to raise its guidance for full-year pretax profits, Chief Financial Officer John Lawler said Thursday. The company now expects to make $11 billion to $12 billion, up from $9 billion to $11 billion. Sales in the U.S., Ford's most lucrative market, rose 10% last quarter,
But Ford backed away from ambitious milestones for building electric vehicles in the future. The company had said it would build at an annual rate of 600,000 this year, but now says that won't happen until next year. Ford also delayed a goal of building 2 billion EVs per year by the end of 2026, pushing that out indefinitely.
Ford predicted its full-year pretax losses on electric vehicles will balloon to $4.5 billion, from $3 billion previously. But the company expects its Ford Blue combustion engine unit and the Ford Pro commercial vehicle operation will each make $8 billion on strong pricing, more than covering the EV losses. Commercial vehicle profits are expected to double from last year.
Lawler said the ramp up on EV production isn't going to be a straight line as the transformation from combustion engines to electricity continues. High prices and perceptions of inconvenience compared with gas vehicles will slow takeup, Lawler said. “It's really about the top line,” he said.
In May, the company c ut prices on its electric F-150 Lightning pickup truck by up to $10,000 on some versions. The updated base price for the Pro model, its lowest priced electric pickup, will be $49,995, down about $10,000. But it's losing thousands on every EV sold.
CEO Jim Farley told analysts that Ford's next generation of electric vehicles will be simpler to build and cost less than the current generation. The company, he said, tore down Tesla and BYD EVs about a year ago and found that Ford vehicles were too complex. The new Fords will have a simpler, more energy efficient underpinning with advanced battery packs that can be used for multiple vehicles, he said.
He said Ford isn’t backing off plans to make 8% profit margins on EVs by the end of 2026, and it will only make vehicles that can hit that margin target. Farley said the company could sell lower-priced vehicles that reach the profit target by increasing the customer base for software services, such as the ability to predict when a part will fail before it happens.
Last quarter the company began reporting profits and losses for the EV, combustion and commercial units for the first time.
Farley also revealed that Ford will unveil a new version of the F-150 pickup and a hybrid version at Detroit’s auto show in September. Ford’s F-Series pickups are the top selling vehicles in the U.S.
Excluding one-time items, Ford made 72 cents per share. That beat Wall Street estimates of 54 cents. Revenue rose 12% to $44.95 billion, beating the $43.17 billion expected by analysts polled by FactSet.
Shares of Ford fell just under 1% to $13.62 in extended trading Thursday. The company released its earnings after the closing bell.
Among the profit “headwinds” that Ford faces this year are inflation, higher industry discounts, and higher costs associated with any contract agreement reached with the United Auto Workers union.
Lawler conceded there will be added expenses, including a contract ratification bonus that would be paid to Ford's 57,000 UAW members.
UAW President Shawn Fain has repeatedly said he wants to get general pay raises, raises tied to the cost of living, restoration of pensions for newer workers and the elimination of wage tiers. He's cited strong company profits and has referenced the possibility of strikes against Ford, Stellantis and General Motors when the current contracts expire at 11:59 p.m. Sept. 14.
Farley said Ford has more UAW-represented jobs in the U.S. than its competitors and has added more workers than required by the union contract signed in 2019. He said that although the negotiations will be challenging, “our goal is to build a bridge to the future with our employees based on mutual trust.”