The behemoth that is the Ford Motor Company shocked the automotive world when it announced a $2 billion loss for 2022, causing stocks for the company to take a nosedive. It doesn’t appear that the company’s fortunes will get better anytime soon.
According to Tech Machine, Ford executives may be low-balling the losses. After the adjusted earnings before interest and tax are calculated, the company may have faced as much as a $10.4 billion loss.
Meanwhile, General Motors and Tesla recorded record profits for 2022.
Ford CEO Jim Farley put on a brave face and tried to explain away the losses in corporate jargon.
“We should have done much better last year. We left about $2 billion in profits on the table that were within our controls, and we plan to correct that with improved execution and performance,” Farley was quoted as saying.
So what happened?
Like the sinking of the Titanic, it was not just the iceberg that doomed the ship but a series of factors that has led to Ford’s troubles.
As part of his zeal to jump on the EV wagon, Farley decided to restructure the company into basically three divisions. The Model E division would fit all EV production under its umbrella, Ford Blue would be in charge of combustion engine vehicle production and Ford Pro would handle commercial and fleet sales.
The problem with this, according to Tech Machine, is that with the Model E division, Ford was creating a start-up within the company. Model E had the outrageous expectation of being able to produce two million EVs annually by 2026.
Ford’s thinking was that the “economy of scale” would lower production costs and, thereby, increase profits.
This expectation came at a time when EV technology is continuing to evolve, and every new innovation requires retooling. It also came at a time when Ford is developing the reputation of not being able to keep up pace with demand for its gas-powered vehicles.
Customers have complained of having to wait up to a year for their new Bronco to be delivered.
This highlights another problem: the supply chain.
While gaps in the supply chain have affected all auto manufacturers, AutoWeek has reported that Ford has quietly and temporarily halted some factories and did not warn investors of the potential impact.
According to AutoWeek, “(T)he loss in value had more to do with Ford management’s failure to warn investors of a rough 2022 as much as the actual results.”
A third reason is that Ford has bought far too much into the EV hype. When most car makers are taking a more measured approach, Ford has sunk billions of dollars into EV research and development.
When the new Mustang Mach E premiered, sales seemed to indicate that Ford was on the right track, but that was before the supply chain problems began.
According to MotorBiscuit, sales of the Mach E slumped badly in 2022, partially because of supply chain issues, but also because people are simply not warming up to EVs as was expected.
So, will Ford become Found On the Road Dead?
Not likely, the company survived the Edsel era and the deep loss of consumer confidence over the Pinto disaster. The company always finds a way to pull the magic rabbit out of the hat.
However, I wouldn’t suggest anyone order a new Ford right now unless they don’t mind walking for a year waiting for the new car to make it off the assembly line.
See you on the road!
Scott Hudson is the Senior Investigative Reporter and Editorial Page Editor for The Augusta Press. Reach him at scott@theaugustapress.com
