Ford Posts $1.8 Billion Profit, Cuts Mustang Mach-E EV Prices
posted $1.8 billion in first-quarter net income, reversing a previous-year loss, as the company rebounded from supply-chain troubles and commanded top dollar for its pickup trucks and SUVs.
The Dearborn, Mich., auto maker said after the close of trading Tuesday that strong recovery in output of F-series pickups and buyer demand for high-end models fueled its bottom line. The company stood by its earlier forecast of $9 billion to $11 billion in pretax profit for the year.
Earlier Tuesday, Ford for the second time this year cut prices on its electric Mustang Mach-E, reducing the sticker by as much as 8% on some versions.
The reduction comes as the U.S. auto maker moves to a lower-cost battery and as rival
also continues to adjust pricing on its top-selling EV models in an attempt to boost sales.
“We are not going to price just to gain market share,” Ford Chief Executive
said of the Mach-E price cuts.
Under a new reporting structure that breaks out the performance of its EV business, Ford said the unit lost $722 million in the quarter. Executives have said they view the EV portfolio like a startup, which will lose money as it builds scale.
Wall Street has been closely watching pricing dynamics in the car market. Recent price cuts by Tesla have raised concerns about profit margins on EVs getting squeezed.
Unlike softening prices in some parts of the EV market, Ford and other auto makers have been able to maintain historically strong transaction prices for gas-powered cars and trucks amid constrained vehicle supply. But there are signs that investors are worried the muscular pricing power that has been driving the auto industry’s profits for nearly three years is easing.
Ford’s net profit for the January-through-March period reversed a $3.1 billion loss in the same period last year, which was largely because of an adjustment in the value of Ford’s stake in electric-truck startup Rivian.
Pretax profit adjusted for one-time items rose 45% to $3.4 billion. That equated to 63 cents per share, surpassing the 42-cent average estimate from analysts polled by FactSet.
Revenue totaled $41.5 billion, up 20% from a year earlier. Ford shares fell 1% in aftermarket trading.
Ford’s gas-engine and commercial divisions are providing the bulk of profit as it aggressively scales EV production. Ford Pro, which sells trucks and vans to electricians, landscapers and businesses, reported a $1.4 billion pretax profit, reflecting its strong performance in non-retail markets. Ford Blue, the legacy gas-engine side of the business, logged a $2.6 billion pretax profit for the quarter.
Ford said Tuesday that it expects to reopen order banks for the Mach-E this week, and plans to increase production of the model at its plant in Mexico later this year to meet customer demand.
Among those versions getting a price trim are the standard-range Mach-Es that will be powered by a lower-cost lithium iron phosphate battery, the company said.
Sales of the Mustang Mach-E—an SUV that made its debut in late 2020—were down about 20% in the first quarter this year with the car company selling 5,407 of them total during the period.
The new sticker prices are about $1,000 to $4,000 less than what the Mach-E versions were priced at in late January, when the last round of cuts took place. The electric SUV will now range between about $43,000 and $60,000 in cost, depending on the trim level.
Tesla has also been changing vehicle prices often as it adjusts to a cooling car market. This week, the company nudged up prices for its two most popular models—the Model 3 sedan and Model Y crossover—by $250 in the U.S.
Those price increases follow steep cuts earlier in the year. The starting prices for the Model 3 and Model Y are down between 14% and 24% from the beginning of the year, depending on the configuration.
Ford’s Mr. Farley has been frank about how far the company has to go in improving its cost structure. He has said Ford has too many people in certain areas, including engineering. Warranty expenses and recalls have weighed on profit and hurt Ford’s reputation with customers, Mr. Farley said.
Overall, the auto maker’s annual costs are about $7 billion to $8 billion higher than competitors, Chief Financial Officer
said after last quarter’s earnings.
Write to Nora Eckert at [email protected]
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