Ford EV business loses $1.3 billion in Q1 2024

[whynot]

I think one has to be really careful about using a cherry picked financial figure, and then jumping to a conclusion. Especially, cherry picked financials provided second hand. There are plenty of examples of financial reports that look great on paper (look no further than Qantas past annual reports) and make Wall Street analysts happy, but deeper down are pointing to long term structural problems.

The actual presentation is here.

https://s201.q4cdn.com/693218008/fil...-NO-SECRET.pdf

So, for sure, the Ford Blue division (classic ICE production) continued to make a profit while Model e division (electric) has continued to make a loss (page 21). However, it is interesting how much Ford Blue has slid backwards the last 12 months (more than Model e), reflecting the much tougher new car market in the USA with its excess inventories.

The other thing to keep in mind is that the USA tax treatment for business investment losses is much more generous in Australia. In addition, we don't have any insight into how Ford is carrying its losses from the EV division on its books, and whether Ford is in the process of offloading those losses right now or is holding onto some for a future date. We also have no insight into what expenditure Ford has loaded onto the EV division. (I have only a very superficial understanding of company tax in the US, but I think there are circumstances where a loss can be backdated three years and carried forward for five years.)

My read of it is that I think Ford is in a better position now than they were a few years back. The sunk costs for EV production will be written off. And while billions sounds like a lot of money, these guys think long term and strategically. Ford has grown its technology and manufacturing capability from ICE (and small PHEV volumes) to ICE, EV, and large PHEV volumes. EV production is a completely new way of building. Ford now has that capability in house. It should be able to better adjust production between all three streams, depending on market demand. EV and PHEV is complementary battery-engine technology, so it should be able to swing its design and manufacture between either as the market demands.

For example, all that is required is a war to break out in the Middle East resulting in fuel shortages, and customers will be clamouring for EV again. While there isn't much demand for it now, the F150 Lightning may be a very astute each-way bet for Ford in its home market.

The final point to all of those budding Nostradamus' out there ... customers are very fickle creatures. It is hard enough to predict the number of people who will use the local Maccas for dinner tonight, let alone predict the number of EV to be sold in five years time.

I think Ford have done well here.