Amidst today’s wild roller-coaster ride on Wall Street, the news about Ford Motors jumps out. Here’s Barron’s headline:
Ford Stock Had Its Worst Day Since 2008
Ford Motor reported earnings that were worse than what Wall Street had expected: Its commercial business couldn’t overcome higher warranty costs. And the stock took it on the chin Thursday. . .
On Wednesday, Ford announced a second-quarter operating profit of $2.8 billion, down 26% from $3.8 billion reported in the second quarter of 2023. Wall Street was looking for $3.7 billion, according to FactSet.
Barron’s goes on to note that Ford is experiencing very high warranty expenses right now, which brings back to mind the nickname for Ford in the nadir of domestic auto manufacturing in the 1970s, when it was said that Ford stood for “Fix Or Repair Daily.”
But as you proceed through the story, you see an additional factor:
Ford’s traditional car business, called Ford Blue, generated an operating profit of $1.2 billion, some $300 million better than in the first quarter. More improvement was expected.
“Traditional car business” means old-fashioned internal combustion engines—you know, the kind Kamala Harris wants to ban. Ford still makes good money making those models.
How about their electric car division? I’m sure you won’t be surprised to hear this news:
Ford’s EV business, called Model e, lost less money—a positive. It reported a loss of $1.1 billion compared with $1.3 billion in the first quarter.
In other words, Ford’s losses on electric vehicles almost wipes out their profit from making the cars most car buyers actually want. (Only Ford’s commercial business, which I assume is mostly trucks and other non-passenger vehicles, allowed them to make the total $2.8 billion quarterly profit.)
By the way, the $1.1 billion EV loss comes out to nearly $50,000 per car. But this is good news, Ford’s CEO says: that figure is down from $100,000 loss per EV in the first quarter! (See David Blackmon or Robert Bryce for more.)
Seems we should update the Ford nickname: “Foolishly Obeying Ridiculous Directives.”
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