Ford Warns Of Slower EV Adoption, Pushes Out EV Target After Q2 Beat-And-Raise

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Ford Motor (F) raised full-year guidance late Thursday after posting a surprise earnings gain for the second quarter on strong truck demand and pricing. Ford stock wobbled in extended Thursday trading as it works on a buy point.

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In Q2, traditional gas-powered vehicles continued to underpin Ford’s profits. Its commercial Ford Pro business saw strong growth in the quarter. Both revenue and losses swelled in the emerging business of electric vehicles, the Ford earnings release on Thursday showed.

The automaker slightly pushed out a key EV production target. “The near-term pace of EV adoption will be a little slower than expected,” Ford CEO Jim Farley said in the release, adding that should benefit early movers like his company.

Ford Earnings

Estimates: Analysts, on average, expected Ford earnings to decline 20% to 54 cents per share, according to FactSet. Revenue was seen rising 7%, year over year, to $43.168 billion.

Results: Ford earnings rose 6%, year over year, to 72 cents. Revenue rose 12% to $45 billion.

Ford Blue, the company’s traditional gas-fueled business, grew revenue 5% and earned $2.31 billion in Q2. Ford Pro, the commercial business, saw revenue jump 22% and earned $2.39 billion.

Ford Model-e, the emerging EV business, saw revenue vault 39%, year over year. But its loss widened to $1.08 billion from $722 million in Q1.

Further, Ford now expects to reach a 600,000-unit global EV production run rate during 2024. It previously expected to reach that target by the end of 2023.

Outlook: For 2023, Ford on Thursday raised its adjusted EBIT guidance to $11 billion-$12 billion, from $9 billion-$11 billion. It now expects full-year adjusted free cash flow of $6.5 billion-$7 billion, up from about $6 billion.

Prior to Q2 results, Wall Street saw Ford earnings for the full year falling 2% to $1.84 per share, FactSet showed.

Ford Stock

In stock market trading late Thursday, Ford stock initially rose 1%, then turned 1.5% lower. F stock had gained 0.4% to 13.73 in the regular session, after rebounding from the 50-day moving average Wednesday. Shares had rallied into earnings, before pulling back to the 50-day line.

Ford stock eyes a 15.42 buy point from a cup-with-handle base that formed over many months, the IBD MarketSmith chart shows.


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EV Transition

On Tuesday, rival General Motors (GM) also beat estimates and hiked its outlook.

GM’s EV strategy came under scrutiny on its investor call Tuesday and Ford is likely to be face similar grilling, Morgan Stanley analyst Adam Jonas said in a Wednesday note to clients.

Ford had cut EV prices in Q2 to stimulate sales, amid a price war started by Tesla (TSLA).

For Q2, Ford has already disclosed robust new vehicle sales in the U.S. market. But electric vehicles, or EVs, made up a small fraction of the total, amid a plant retooling that curbed inventories.

Established automakers have seen their rollout of new EVs hampered by battery and other supply issues. Meanwhile, a licensing deal between Ford and Chinese battery giant CATL is under legislative scrutiny.

Amid fierce EV competition, Ford recently cut Mach-E prices, and then slashed Lightning prices citing lower battery costs. The upcoming Silverado electric truck will beat Ford’s Lightning on range, GM says.

Established automakers are betting that the risky and costly EV transition will eventually pay off.

Year to date, Ford stock was up 19.1% vs. a 112.1% jump for Tesla shares.

Other EV News

Late Wednesday, QuantumScape (QS) announced Q2 financial results. In an accompanying letter to shareholders, the EV battery startup said: “We have shipped high cathode-loading unit cells to multiple automotive partners, in line with our development roadmap.” It described this as a “significant step toward delivering a commercial product.”

QuantumScape stock surged 14.2% to 10.70 Thursday, paring gains. Ford has previously partnered with QuantumScape rival Solid Power (SLDP) for solid-state batteries.

On Wednesday, Volkswagen (VWAGY) said it will jointly develop electric cars with XPeng Motors (XPEV) and invest $700 million in the Chinese EV startup for a 5% stake. XPeng stock rocketed 26% Wednesday and climbed 3.9% Thursday.

Seven global automakers, including GM, also announced an EV charging network, challenging Tesla.

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