The Ford Motor Company is facing rough waters as its stock plummeted by 9% following the release of its third-quarter earnings report. The results revealed that Ford’s revenue and profit both fell short of analysts’ estimates, a consequence of lost production due to the United Auto Workers’ strike and declining demand for electric vehicles (EVs).
Ford’s third-quarter results starkly contrasted with its rival, General Motors, which posted earnings that exceeded Wall Street estimates. Ford’s difficulties were exacerbated by the UAW’s decision to strike three key U.S. factories, including a vital truck factory in Kentucky. Ford CFO John Lawler pointed to the UAW deal, stating, “If ratified by members, will add $850 to $900 in costs to every vehicle assembled in the U.S.”
The company also reported declining demand for EVs, announcing a delay in its planned $12 billion spending on EV manufacturing capacity. This decision was attributed to North American customers’ reluctance to pay a premium for an EV versus comparable internal combustion or hybrid alternatives.
Despite these setbacks, Ford remains committed to developing a range of more advanced EVs. However, investors question the company’s ability to compete with Tesla and other new EV entrants. The withdrawal of its previous financial guidance for 2023 in light of the pending deal with the UAW only adds to the uncertainty surrounding the company’s future.
The road ahead for Ford is paved with obstacles as the company grapples with increased costs, declining EV demand, and the fallout from the UAW strike. The contrast between Ford’s struggles and GM’s success highlights the urgency for Ford to address its challenges and find a way to navigate the ever-changing automotive landscape. The actions Ford takes in the coming months will be crucial in determining its ability to compete and thrive in an industry that is rapidly evolving.
