Ford Motor Co. on Tuesday reported profits of $1.76 billion in the first quarter of 2023 that topped Wall Streets expectations, as the automaker’s fleet and legacy operations outweighed growing losses in electric vehicles.
Revenue rose 20 percent year-over-year to $41.5 billion for the quarter on a 9 percent increase in vehicle shipments over the same period last year. The results beat the $36.08 billion that analysts expected.
Last year, Ford reported a net loss of $3.1 billion during its first quarter due to losses related to its investment in electric vehicle startup Rivian.
The Detroit automaker reaffirmed its earlier pretax profit guidance for the full-year adjusted earnings between $9 billion to $11 billion and roughly $6 billion in adjusted free cash flow. Ford said it plans to have capital expenditures of between $8 billion and $9 billion in 2023.
The company lost $722 million before taxes on its electric vehicles, but it made $2.62 billion on internal combustion vehicles. The company’s commercial vehicle unit added $1.37 billion to the pretax profits.
The company’s profits were fueled largely by sales in the United States, its most lucrative market. Ford sold just under 472,000 vehicles from January through March, up 9.9 percent from the previous year.
The company continued to get strong prices for its vehicles during the quarter, driven by loaded-out trucks and big SUVs. Ford’s average sale price was $56,534, according to Edmunds.
Earlier Tuesday, Ford cut prices on its Mustang Mach E electric SUV for a second time this year, the same day Tesla raised prices slightly on the Model Y, the Mach E’s main competitor.
With order banks reopening, and a factory in Mexico overhauled to dramatically increase production more efficiently, Ford said it can afford to cut prices in an attempt to grow market share.
In a late briefing, Ford Chief Executive Officer Jim Farley said he hopes the company becomes “boringly predictable” at meeting investor expectations. Ford missed Wall Street estimates for the fourth quarter, leaving $2 billion on the table, Farley said earlier this year.
Farley also said Ford does not intend to pursue EV sales volume “at any cost.” His stance contrasts sharply with that of Tesla CEO Elon Musk, who said last month that the EV maker could cut profit margins on vehicle sales to zero and make up the difference through sales of software-enabled services. Tesla, however, has the advantage of earning higher profit margins on its EVs than Ford and other legacy automakers have across their full portfolios.
Facing declining demand for its products in China, Ford will restructure its operations there to run on lower investment, and “double down” on its commercial vehicle business there, including EVs, Farley said. Ford’s joint venture with Chinese automaker JMC Corp can become an export hub for lower-cost commercial electric and combustion vehicles, he added.
Although U.S. vehicle sales in April were much stronger than expected, Ford cautioned that “higher industrywide customer incentives as vehicle supply-and-demand rebalances” will be a “headwind” for profitability.
In the meantime, the company expects continued pricing pressure on its Ford Blue combustion models, while Ford Pro commercial vehicles retain some pricing strength.
