Ford has published its third-quarter earnings report, and it could have looked a lot different were it not for a shift in the automaker’s electric vehicle (EV) strategy.
Ford’s Q3 revenue topped $46 billion, marking a 5.5% increase from last year and beating Wall Street’s expectations. This quarter is Ford’s 10th consecutive period of revenue growth, but the company’s net income fell 25% to $892 million, as the costs of its EV strategy took a toll.
Much of this profit reduction is linked to a $1 billion charge associated with the cancellation of Ford’s planned three-row electric SUV. This decision was part of Ford’s strategic shift to reduce costs, as the market for large electric SUVs hasn’t yet proven viable for profitability.
Additionally, Ford has implemented a broader cutback in EV investments, including a 35% reduction in the production capacity of its Mustang Mach-E, reducing costs by approximately $5,000 per vehicle.
The Model e unit, dedicated to Ford’s EV program, reported a quarterly loss of $1.2 billion, bringing total losses for 2024 close to $3.7 billion. Ford anticipates that Model e will post a total annual loss of between $5 billion and $5.5 billion, which is at the lower end of its initial forecast.
However, Ford remains committed to its EVs, with CEO Jim Farley stating the company has a “significant financial upside as we bend the curve on cost and quality.” Ford has achieved nearly $1 billion in year-to-date savings in material and battery costs, although these improvements were not enough to mitigate the losses.
Ford’s position in the EV market has been further challenged by a long-standing competitor. General Motors (GM) not only surpassed Ford in total EV sales but reported a 60% year-over-year increase, selling 70,450 EVs in the first three quarters of 2024, compared to Ford’s 67,689.
