SAN FRANCISCO (AP) — Ford on Thursday reported significant growth in the third quarter, although its financial results fell short of Wall Street estimates.
The automaker posted net income of $1.2 billion for the three-month period that ended Sept. 30. A year earlier it lost $827 million after taking a $2.7 billion write-down of its investment in a shuttered autonomous vehicle technology startup. Revenue increased by 11% in the latest quarter, coming in at $43.8 billion.
Ford's latest quarterly profit, adjusted for one-time items, amounted to 39 cents a share. That was below the 46 cents a share expected by industry analysts, according to FactSet.
One of its weakest areas was Ford's electric vehicle division, where earnings before interest and taxes fell to a loss of $1.3 billion in the quarter — a significant widening from a $600 million loss in the year-earlier quarter — despite a 29% increase in revenue to $1.8 billion. The company blamed price competition in the sector, but Ford executives stressed that they remain committed to electric vehicles.
Ford said a slowdown in electric vehicle sales and prices has caused it to delay plans to build one of two new joint-venture EV battery factories in Kentucky that was announced two years ago. The company also is trimming Mustang Mach-e production and delaying other spending on EVs totaling $12 billion, Chief Financial Officer John Lawler said.
The company already has placed on hold plans to build another battery plant near Marshall, Michigan.
With a flattening growth curve for EVs, Lawler said, "We're going to match demand and capital needed to meet that demand." The company, he explained, may not move on EV plans if it doesn't have to. "It's something that's going to adjust as we move and how that business develops," he told analysts.
Farley said the next two generations of EVs will be more aerodynamic, allowing smaller batteries to get longer range and trimming costs. They company also is bringing more EV work in house and designing the vehicles to be manufactured easier.
Ford also said that warranty costs took about $1.2 billion from its pretax earnings from July through September, something that Farley has been trying to get under control since he started as CEO in October of 2020. About $300 million of the costs came from higher repair prices due to inflation, but $900 million was in warranty claims, Lawler said.
Farley, who this month appointed Kumar Galhotra as chief operating officer to help stem the costs, said the company already is improving in quality and is working to reduce the complexity of its vehicles and make them easier to manufacture.
Ford, he said, is slowing down new vehicle launches to do more testing and improve quality. For example, it delayed the sale date of new F-Series Super Duty Pickups to do more testing. That cost the company $1 billion but will save on future recall costs.
The results came out just a day after Ford reached a tentative contract agreement with the United Auto Workers union. The four-year labor deal, which still has to be approved by 57,000 union members at the company, could bring a close to the union's series of strikes at targeted factories run by Ford, General Motors and Jeep maker Stellantis.
The Ford deal could set the pattern for agreements with the other two automakers, where workers will remain on strike. The UAW called on all workers at Ford to return to their jobs and said that will put pressure on GM and Stellantis to bargain.
"We told Ford to pony up, and they did," President Shawn Fain said in a video address to members Wednesday night. He added that Ford put 50% more money on the table than it did before the strike started on Sept. 15.
Shares in Ford Motor Co., which is based in Dearborn, Michigan, were down 3.4% in after-hours trading following the earnings report.
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Associated Press Auto Writer Tom Krisher in Detroit contributed to this report.