Ford stock surged after the automaker reported fourth-quarter sales that exceeded expectations and projected a full-year profit outlook that beat estimates. The company also expects to see more losses for its electric vehicle (EV) unit. Despite this, Ford reported an incredible performance, with higher year-over-year revenue and earnings per share, surpassing all estimates. The automaker is reassured about its 2024 outlook, with projections of strong adjusted earnings before interest and taxes (EBIT) of $10 billion to $12 billion. Despite the reassurance, Ford’s EV unit recorded an EBIT loss of $4.7 billion for the year, with 2024’s losses expected to widen to $5 billion to $5.5 billion, reflecting the competitive pricing environment and strategic investments in the development of next-generation EVs.
Ford has been focused on improving capital efficiency and plans to selectively reduce investments in order to enhance total adjusted return on invested capital from 14% in 2023 to 20% over the next couple of years. Despite these efforts, the company is seeing a slowing demand for its EVs, particularly the Mustang Mach-E, as well as decreasing overall sales of its EVs in January. Last year, Ford divided into three business units: Ford Blue, Ford Model e, and Ford Pro, and lastly, CEO Jim Farley indicated a seismic change in the EV market in the US, with customers reluctant to pay higher prices. He also eluded to a low-cost EV platform being developed internally by Ford, suggesting a potential competitor to Tesla’s upcoming $25,000 EV.
As Ford continues to navigate the complex terrain of the auto industry, it is clear that adapting to market demands and investing in cutting-edge technologies will be crucial for its long-term success. With EVs being an area of intense focus, it remains to be seen how Ford will strategically position itself to drive growth and profitability amidst increased competition and changing consumer preferences.