Ford Motor missed earnings estimates for the fourth quarter late Thursday and gave a downbeat outlook, following rival General Motors' beat-and-raise Tuesday. F stock plunged Friday.
Earlier Thursday, Ford announced that its overall and EV sales grew in January vs. a year ago. But both total and EV sales saw month-over-month declines.
Legacy automakers are making a costly shift to electric vehicles and, eventually, away from combustion-engine cars. What promises to be a years-, if not decades-long transition, is weighing on margins.
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Ford Earnings
Estimates: Analysts polled by FactSet expected Ford earnings to rebound 139% to 62 cents per share, reflecting an easy year-ago comparison in part. Revenue was seen growing nearly 10%, year over year, to $41.394 billion.
In the year-ago quarter (Q4 2021), automakers' quarterly sales broadly took a hit from weak vehicle inventories caused by semiconductor shortages and supply-chain issues.
Results: Ford's adjusted earnings nearly doubled to 51 cents per share, but the 96% increase fell well short of estimates. Revenue grew almost 17% to $44 billion, better than forecast.
Ford blamed the results, also below its own expectations for both Q4 and full-year 2022, on "execution issues" due to supply chain and production challenges, which raised costs and lowered delivery volumes.
"We should have done much better last year," CEO Jim Farley said in the Ford earnings release. "We left about $2 billion in profits on the table that were within our control, and we're going to correct that with improved execution and performance."
Outlook: For fiscal 2023, Ford expects to generate $9 billion-$11 billion in adjusted earnings before interest and taxes (EBIT), with the midpoint below adjusted EBIT of $10.4 billion in 2022.
Ford anticipates $6 billion in adjusted free cash flow, which would be well below $9.1 billion for 2022.
In 2023, analysts project Ford earnings of $1.65 per share, a 13% decline from 2022 levels. Revenue for the full year is now seen growing 0.8%.
F Stock Tests Key Level
Shares of Ford Motor dived nearly 10% to 12.92 on the stock market Friday, testing the 50-day moving average. Ford stock rallied into earnings to regain key averages. F stock is in a double-bottom base with a 14.77 buy point.
GM stock popped 5.6% to 41.50 Thursday and was roughly unchanged Friday. Shares are forming a cup base with a 41.68 buy point.
On Tuesday, General Motors blew past analyst Q4 earnings and revenue targets. GM also announced a big investment in Lithium Americas, as the auto giant ramps up on electric vehicles and lithium-based EV batteries.
Tesla stock rose 3.8% to 188.27 Thursday and added nearly 3% Friday. TSLA stock has rallied off two-year-plus lows, set in January, after cutting the prices of several models by as much as 20%. TSLA stock has gained more than 90% from a Jan. 6 low, and is back above its 50-day moving average.
Ford EV Sales, Price Cut
On Thursday morning, ahead of earnings, Ford said it grew new vehicle sales in the U.S. 2%, year over year, in January. The gains were led by F-Series trucks, Bronco SUVs and electric vehicles.
Ford EV sales more than doubled last month, though they remain a small part of its total sales.
In January, overall Ford sales fell 18.4% on a month-over-month basis. Ford's EV sales, including the Mach-E and F-150 Lightning, were down by nearly a third vs. December 2022.
On Monday, Ford announced 6%-8% price cuts for its Mustang Mach-E, an electric SUV rival to the Tesla Model Y, which itself saw price cuts a few weeks ago.
Ford said it would cut Mustang Mach-E prices by as much as $5,900 per vehicle while raising its production, "to keep the SUV competitive in a rapidly changing market."
In 2022, Ford's EV sales more than doubled to 61,575, despite tight inventories. That made Ford the distant No. 2 EV maker in the U.S. behind Tesla.
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Electric vehicles currently remain a small portion of overall sales for traditional automakers. But, in the long term, the segment is seen as a growth driver for Ford, GM and others.
By 2030, GM, Ford and Stellantis expect as much as half of U.S. sales to be all-electric vehicles, also known as battery electric vehicles, or BEVs.
Supply Woes Hit Auto Sales
In 2022, Ford saw its total new vehicle sales in the U.S. shrink 2.2%, though December sales rose 3.2% as supplies improved. GM managed to grow U.S. sales 2.3% for the full year.
The chip shortage and other supply disruptions hit industrywide vehicle production and inventories for most of 2022, easing in the final quarter. But demand concerns emerged in Q4 and have grown since.
The affordability of new vehicles fell again in December and reached a new low in 2022, according to the Cox Automotive/Moody's Analytics Vehicle Affordability Index.
In December, auto loan rates reached a 20-year high and the average new vehicle price hit a record $49,507, Cox Auto says. The typical monthly payment for a new vehicle increased to an estimated $777, another record.
Further muddying the 2023 auto outlook is a weakening global economic outlook. That is a big challenge for auto giants, who are in the midst of a massive and expensive EV transition.
