From Fortune:
Ford Motor Co. is working on small, inexpensive electric vehicles to counter its EV losses and compete with Tesla and Chinese automakers. CEO revealed plans after surpassing 4Q revenue expectations and doubling earnings per share predictions. Ford’s EV losses amount to billions, but small EV platform plans aim to generate profit. The automaker will also implement $2 billion in cost cuts and estimates annual earnings between $10-12 billion before interest and taxes. Ford shares rose 5.5% after bullish guidance.rière. Ford intends to cut $12 billion in EV spending and increase traditional internal combustion engine production to fund future growth. The company anticipates ridiculous earnings potential, reducing the time and investment in EV products. Despite slowly accelerating electric vehicle sales, Ford is attempting to scale back EV spending while boosting traditional internal combustion engine production. Ford projects earnings between 10-12 billion before interest and taxes in 2023, comparing similarly to 2022. The carmaker aims to reduce costs by $2 billion, targeting materials, freight, and manufacturing operations. Ford is also giving investors a supplemental dividend of 18 cents a share in addition to the regular 15-cent quarterly dividend. This decision caused the stock to trade up on better-than-expected results and guidance. In December, Ford halved production of electric F-150 Lightning pickups but increased output of profitable SUV’s and pickup trucks. The automaker no longer expects to reach its 8% margin goal on EVs by 2026. As a result, Ford’s 2023 EV deficit translated to a loss of roughly $28,000 on each battery-powered model. Ford has pivoted to hybrid gas-electric vehicles to address strong consumer demand, with Farley expecting a 40% rise in sales of hybrid models. Ford now faces higher labor costs than its rival GM due to its deal with the UAW, increasing costs by up to $900 per vehicle. GM forecasted between $12-14 billion in earnings before interest and taxes, showing a better setup to absorb labor costs than Ford. Ford is undergoing tightrope profit management, with Ford Blue experiencing margin pressure and Ford Pro predicted to see margin expansion. Despite challenges, there is an expectation for a 9% increase in US electric vehicle sales in 2024.
Read more: Ford earnings: Working on smaller, cheaper EV as it projects $5.5 billion unit loss
