© Reuters. FILE PHOTO: A logo is seen on the grill of an E-transit concept vehicle during a press event at the Ford Halewood transmissions plant in Liverpool, Britain, December 1, 2022. REUTERS/Phil Noble/File Photo
By Joseph White, Paul Lienert and Nathan Gomes
(Reuters) -Ford Motor Chief Executive Jim Farley on Thursday outlined a significant change in the automaker’s product strategy, slowing the ramp-up of money-losing EVs, shifting investment to Ford’s commercial vehicle unit and citing plans to quadruple sales of gas electric hybrids over the next five years.
He described the company’s high-margin Ford Pro commercial business as a “powerhouse” and said the company now expects to launch more gas-electric hybrids.
Ford plans to quadruple sales of gas-electric hybrids in the next five years, as it struggles to reduce the cost of its money-losing first-generation battery electric vehicles, executives said.
The company raised its annual pretax profit expectation, while forecasting a full-year loss of $4.5 billion on its Model e unit – 50% higher than projected earlier this year.
Ford lost more than $32,000 on average on EVs delivered by Model e during the second quarter.
Chief Financial Officer John Lawler said it was not fair to focus on the loss per vehicle, given the company’s upfront investment to launch the first-generation EVs.
Wells Fargo (NYSE:) analyst Colin Langan, in an investor note on Thursday, said Ford’s new full-year pretax earnings guidance “implies a notable step down” in second-half earnings, to an implied $4.3 billion, compared with $7.2 billion in the first half.
Lawler said Ford’s challenge in selling EVs is not consumer interest, but high prices.
“We’re not shying away from our EV plans,” Lawler said. “This is not going to be a straight line. There’s going to be some bumpiness as we move along.”
Ford said it will take longer to accelerate EV production to an annualized rate of 600,000 vehicles. Previously the company had said it would hit that rate late this year. Now it is aiming to reach that pace in 2024.
The automaker’s Ford Pro commercial vehicle business is now returning pretax margins that are nearly twice as high as those for the full company.
Ford Pro out-earned the Ford Blue combustion vehicle unit in the second quarter, with $2.4 billion in pretax profit, with a 15.3% EBIT margin.
On the strength of its combustion pickups and SUVs, Ford Blue had $2.3 billion in pretax profit, with an EBIT margin of 9.2%.
Ford expects profits in both units to help offset higher than expected losses at Ford Model e. Ford Pro and Ford Blue each are projected to earn about $8 billion in EBIT for the full year.
The company now expects pretax profit for the year to come in between $11 billion and $12 billion, compared with its prior forecast of $9 billion to $11 billion.
Adjusted earnings before interest and taxes rose slightly to $3.8 billion in the quarter, from $3.7 billion a year earlier. Adjusted EBIT margin dropped to 8.4% from 9.3% last year.
Revenue rose to $45 billion, from the year-ago $40.2 billion.
Ford shares were down more than 1% in after-hours trading on Thursday after closing the regular session up 0.4% at $13.73.
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