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In its latest earnings call on October 26, Ford Motor Company announced that it will shift investments from developing L4 autonomous driving technology to improving L2 and L3 ADAS technologies. CEO Jim Farley also added that the IRA tax benefits for commercial vehicles are critical for Ford.
In the third quarter of this year, the US automaker wholesaled more than one million vehicles, up about 7% from the third quarter of 2021, and generated total revenue of US$39.4 billion.
Net profit margin fell to -2.1% from 1.7% in Q2, bringing the quarter to a net loss of US$800 million.
Ford posted a US$200 million loss in China in the same quarter, driven by investments in electric vehicles (EVs). Sales in China were down 11% in 3Q22.
Farley noted that sales results in China and Europe were “not nearly as healthy as we would like.” He added that Ford must continue to improve competitiveness, not only in terms of quality, but also in cost and supply chain management, as the automaker disclosed in September that it will have about 40,000 to 50,000 vehicles in inventory by the end of 3Q22. due to shortage of certain parts.
Ford’s EV push in Europe
In terms of electric cars, the company is on track to reach an annual production rate of 600,000 electric vehicles by the end of 2023 and more than two million electric cars by 2026.
Farley said Ford’s production target will not be changed and that “Ford’s all-new electric vehicle manufacturing facility in Cologne, Germany will be ready to produce vehicles in mid-2023.”
The company has committed to going electric in Europe. The company is investing a planned total of US$2 billion in the construction of the Electrification Center in Cologne and has selected its factory in Valencia, Spain as the preferred location for assembling vehicles based on the next-generation electric vehicle architecture.
The company announced earlier this year that the Cologne plant is expected to produce 1.2 million electric cars within six years. By 2026, the sales target for electric vehicles in Europe is at least 600,000 units. By comparison, the automaker sold 18,257 electric cars in the U.S. in the third quarter of 2022, remaining the second-largest electric vehicle brand in the U.S., the company said.
The Inflation Reduction Act is crucial for Ford
Back home, Ford has begun construction at Blue Oval City in Tennessee, where it will build trucks and batteries for a new generation of electric vehicles.
The company has already broken ground on the new BlueOval SK battery plants in Kentucky. The company’s partnership with SK On also expanded to Turkey, where it is planned to establish one of Europe’s largest commercial vehicle battery production plants with the South Korean battery manufacturer and the Turkish company Koç Holding.
Farley said the Ford team is “making great progress in securing the raw materials that are important to processing those raw materials and the battery capacity that we need.”
The SK On joint venture is likely to benefit Ford and its customers once the IRA is accepted. Farley noted that the IRA will have “multiple positive impacts” on battery manufacturing, commercial sales of electric vehicles, retail sales and green energy development.
Notably, Ford said it is the largest commercial vehicle brand in the United States. Starting next year, an estimated 55% to 65% of Ford’s commercial customers will be qualified to claim $7,500 for each commercial vehicle purchased, with no battery sourcing or manufacturing restrictions.
As battery production in the U.S. grows, Ford estimated that it and its battery partners could receive a total of more than $7 billion in tax incentives by 2027.
Ford’s total revenue and net profit margin 2021-2022
Source: Ford; Prepared by DIGITIMES Asia November 2022
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