Key Metrics
- Revenue:
- Ford Blue: $26,238 million (3% yoy)
- Ford Model e: $1,173 million (not provided)
- Ford Pro: $15,655 million (13% yoy)
- EBIT:
- Ford Blue: $1,627 million (decrease of $91 million yoy)
- Ford Model e: $(1,224) million (not provided)
- Ford Pro: $1,814 million (increase of $160 million yoy)
- Ford Credit: $544 million (up $186 million yoy)
- Corporate Other: (not provided)
Forward guidance
- Full Year Adjusted EBIT: Expected to be about $10 billion due to higher warranty costs and inflationary pressures in Turkey.
- Adjusted Free Cash Flow: Projected between $7.5 billion to $8.5 billion for the year.
- CapEx Guidance: Anticipated to be between $8 billion to $8.5 billion.
- Ford Pro EBIT: Expected to be around $9 billion with improved market conditions.
- Model e Losses: Projected loss of about $5 billion, with over $1 billion in cost improvements expected.
- Ford Blue EBIT: Anticipated to be $5 billion, reflecting higher manufacturing and warranty costs.
- Warranty Cost Improvements: Expected to take up to 18 months to see significant reductions in warranty expenses.
Key takeaways
- Positives:
- Jim Farley emphasized Ford's strong global footprint, stating, "Now, all of those regions are collectively profitable," highlighting successful restructuring efforts in previously unprofitable markets.
- The EV strategy is positioned as a competitive advantage, with Farley noting, "We moved early... and learned a lot on Gen-1 from our customers," indicating adaptability to market demands.
- Ford Pro's growth is robust, with John Lawler reporting, "Ford Pro delivered close to $16 billion of revenue in the quarter, up 13%," showcasing resilience in the commercial segment.
- Cost reductions of $1 billion in EV costs this year were achieved, with Farley stating, "We trimmed our capacity to -- by 35%," aligning production with market expectations.
- The company is seeing a significant increase in software revenue, with Farley noting, "Our paid subscriptions delivered a growth of 50% in revenue," indicating a shift towards high-margin services.
- Negatives:
- Rising warranty costs remain a concern, with Lawler admitting, "I can't tell you when that curve is going to bend for sure," indicating uncertainty in resolving quality issues.
- The EV segment is projected to incur a loss of about $5 billion, with Lawler stating, "We are seeing some top-line pricing pressure," reflecting challenges in the competitive EV market.
- Inventory levels are higher than targeted, with Farley acknowledging, "We ended the quarter with 91 days of gross stock," which could lead to potential pricing pressures.
- Competitive pressures from new entrants in the EV market are significant, with Farley noting, "We're expecting roughly 150 new EV nameplates to hit North America by the end of 2026," indicating a crowded market landscape.
Peer Summary
- General Motors (GM): GM's EBIT guidance of $14 billion to $15 billion indicates strong financial performance, contrasting with Ford's projected $10 billion. GM's focus on 200,000 EVs in 2024 highlights competitive EV production capabilities, while Ford anticipates a $5 billion loss in its EV segment. GM's effective inventory management and lower incentives suggest a more favorable pricing environment, as noted by Barra: "we have been able to grow our retail market share... below-average incentives."
- Tesla: Tesla's projected 20% to 30% vehicle sales growth for 2025 contrasts with Ford's challenges in the EV market, where pricing pressures are evident. Musk's comment that "no EV company is even profitable" underscores the competitive landscape, while Ford's acknowledgment of 150 new EV nameplates entering North America by 2026 indicates increasing competition.
- Rivian: Rivian's anticipated 20% reduction in material costs may enhance profitability, contrasting with Ford's ongoing $5 billion loss in its EV segment. Rivian's production challenges reflect broader supply chain issues affecting the sector, as noted by Scaringe: "This has been a tough quarter for us."
- PACCAR: PACCAR's strong Class 8 market share growth and robust vocational segment performance suggest resilience in the truck market, while Ford faces rising warranty costs and inventory challenges. Feight's remark about the vocational segment remaining strong indicates a competitive edge in that area.
