Written by / Zhang Ou
Editor/ Zhang Linyu
Design / Shi Yuchao
On April 27, Ford Motor co., Ltd. reported its first quarter 2022 earnings report, losing $3.1 billion.
Revenue was down 9 percent from a year ago to $34.48 billion. Vehicle sales were 966,000 units, down from 1.1 million a year ago. Fortunately, higher prices for new cars helped offset some of the impact of lower sales.
After adjusting to exclude one-time items, earnings per share were 38 cents.
Chip shortages across the industry continue to limit Ford's supply of pickups and SUVs in North America, and investment in Rivian has been dragged down by a sharp decline in its stock price. Excluding Rivian stock, interest and pretax profit was $2.3 billion, still down from $3.9 billion in the year-ago quarter.
All numbers have slipped, and Ford's top management has described the three-month operation as "mixed", and it is clear that Ford is confident in its next plans and developments. They believe the company is still on track to meet its 2022 measurement target, with full-year profits expected to be $11.5 billion to $12.5 billion before taxes and some other expenses.
The start of 2022 is not good
Sadly, Ford's performance is in stark contrast to its two biggest competitors.
On April 20, Tesla announced a net profit of $3.3 billion in the first quarter, a seven-fold increase from the same period last year; on April 26, General Motors also reported a profit of $2.9 billion.
John Lawler, the company's chief financial officer, said on a conference call: "There is strong demand for SUVs and pickups, but due to chip shortages, we can't produce enough products and the manufacturing capacity is not fully demonstrated." ”
Ford is taking steps to increase the supply of semiconductors and strive to improve production speed within this year. Meanwhile, the much-anticipated Ford F-150 Lightning electric pickup, which went on sale on April 26, is expected to quickly increase sales and generate revenue as America's favorite classic truck for years.
Chip shortages have already caused several of Ford's North American plants to close for a week or two in stages, and they are also facing inflationary pressures from suppliers. If inflation continues to rise, new car prices are likely to continue to rise.
Lawler said the cost of goods is estimated to increase by about $4 billion year-on-year in 2022.
CEO Jim Farley, who spoke at the F-150 Lightning production launch ceremony
(Source: Michael Wayland/CNBC)
The appeal of electric vehicles to younger consumers has successfully driven investor interest in pure electric vehicle startups.
Rivian is one of the most famous, known as Tesla's strong contenders. Since 2019, Ford has invested $1.2 billion in Rivian, holding a 12 percent stake.
In November 2021, Rivian's initial public offering of shares soared in market value, and the stock price soared to $179.47 at one point. But then, supply shortages slowed production of Rivian electric pickups, electric SUVs and Amazon delivery vehicles, and the stock price quickly cooled, with the April 27, 2022 baseline falling to around $31.
At the end of March, Ford's stake in Rivian was valued at $5.1 billion, down in half from $10.6 billion at the end of 2021.
Respond to transformation and change the talent structure
The Detroit Free Daily confirmed on April 27 that Ford had laid off 580 employees in the United States.
The layoffs are mostly happening in the engineering sector, because like all other traditional car companies, Ford is moving from traditional internal combustion engine cars to electric cars and trucks that require different skill sets.
Monique Brentley, a Spokesman for Ford, said: "We are adjusting staffing around the key skills required for the Products, Services and Ford Plus program, including the U.S. engineering team. There will be a reallocation and reduction of approximately 350 salaried positions and 230 agency positions. ”
As compensation, Ford is providing benefits to 350 employees, including severance payments equivalent to up to 9 months' wages, 9 months of benefit continuation, and career transition services.
"We look at the whole which parts best meet the needs of employees during the transition period, whether it's other full-time jobs, starting a business or retiring." Brentley said.
Farley has said earlier that in the face of transformation, Ford needs completely different talents. The company plans to close the talent gap and is now actively recruiting new employees.
The 120-year-old company currently employs about 87,000 people in the United States, including about 31,000 paid employees.
Jim Farley poses with employees at the launch of the F-150 Lightning's production ceremony on April 26
(Source: Detroit Free Press)
A battery gap more terrible than a chip shortage
Entering 2022, the demand for batteries in the field of electric vehicles seems to have been pushed to the edge of the cliff.
Ford executives said on a conference call that they saw considerable inflationary pressures, such as lithium and nickel, in terms of raw materials needed for electric vehicle batteries. And if you want to go further down the road of electrification, raw material supply will be a key issue.
"We know very well that batteries are a key unlocking way to realize our aspirations for electric vehicles and drive our future growth." Ford CEO Jim Farley told investment analysts, "In the short term, we're in good shape." In the medium to long term, securing raw materials, processing and refining, as well as establishing battery production in the United States and around the world, will be an important part of our work. ”
Doug Field, a former executive at Apple and Tesla who now serves as chief electric vehicle and digital systems officer for Ford's Electric Vehicles business unit, said lithium iron phosphate (LFP) batteries will be an important part of Ford's electric vehicles in the future.
"We're also looking at other chemicals, hoping to reduce our reliance on materials that are in high demand in the market," Field said. ”
According to CNBC, Tesla is using LFP batteries in its products, and Rivian has begun to do the same.
Asked what Ford thought about the metals and mining industries, Farley said Ford was open to cooperation.
On the one hand, it can create more efficient value for mutual benefit; on the other hand, Ford is considering investing funds to bring processing and manufacturing work back to its North American headquarters as much as possible.
Ford's Dearborn headquarters plant in Michigan
(Source: Sylvia Jarrus / The New York Times)
In fact, more and more automakers are beginning to plan ahead to try to alleviate the problem of battery raw material reserves.
According to Benchmark Mineral Intelligence, demand for lithium-ion batteries has surged to 400 gigawatt hours in 2021 from 59 gigawatt hours in 2015 and will jump another 50% in 2022.
On April 8, Tesla CEO Elon Musk tweeted that "the price of lithium has reached crazy levels!" "Tesla may have to go straight into large-scale mineral mining and refining.
In an interview with The Wall Street Journal in mid-April, Rivian CEO RJ Scaringe warned the auto industry: "The semiconductor shortage that will sweep the auto industry in 2021 is just a small appetizer compared to the severity of the battery shortage we are about to usher in in the next 20 years." ”
An F-150 Lightning was on display at a production launch ceremony
(Source: Carlos Osorio /AP)
On April 26, Ford held a production launch ceremony for the proud F-150 Lightning. At the ceremony, Farley confidently announced that Ford had set its sights on Tesla and hoped to replace it as the world's leader in electric vehicles.
"We plan to challenge Tesla and all the track competitors to become the world's top electric vehicle manufacturer." "And, with the F-150 Lightning, Ford also has the absolute potential to become the world's top electric pickup manufacturer," Farley said. ”
He gave a small preview of the second Ford electric truck after the F-150 Lightning, and has not disclosed more information at this time.
Ford plans to have the capacity to produce 600,000 electric vehicles by 2023, including 150,000 F-150 Lightnings and 200,000 Ford Mach-E crossovers. It plans to have the capacity to produce 2 million electric vehicles worldwide by 2026.
This article was originally produced by Automotive Business Review
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