24/7 Wall St. Insights
- Ford Motor Co. (NYSE: F) has proven time and again that it is the worst-run American corporation.
- Management has nothing new to say about EV losses, warranty costs, and more.
- Also: Dividend legends to hold forever.
Ford Motor Co. (NYSE: F) is the worst-run among all of America’s largest public companies. It has proven that month after month, quarter after quarter, and year after year. It has been proven based on its terrible strategic decisions and because it builds low-quality vehicles. Charting a zig-zag course toward what it believes should be successful has proven it. So has its market cap of $45 billion, while Tesla’s is $485 billion. And it has proven it because its shares are down almost 10% this year, while the shares of crosstown rival General Motors Co. (NYSE: GM) are higher by 47%.
Here Is the Proof
EV losses, warranty costs, and more.
Ford’s new quarterly report lists symptoms. Net income fell to about $900 million, partly because of earlier investment in the electric vehicle (EV) initiative. Revenue rose 5% to $46.2 billion. Much of this could be attributed to pickups, led by the F-Series, which accounts for more than 33% of its sales in the United States.
Ford lost another $1.2 billion on its EV projects. Management once said it would invest $30 billion in the sector. At one point, it said it would produce 600,000 EVs annually by the end of 2023. It then pushed that to 2024. Ford never had a chance to do this. It even planned to build 150,000 of its EV flagship F-150 Lighting. It barely sells a few thousand a month. As it bungled those decisions, it changed the price of the Lightning four times.
Ford’s warranty costs hit earnings enough in the previous quarter that it drove the stock down. During the most recently reported quarter, Ford said its annual profit would be toward the low end of estimates because of warranty expenses. Ford claimed it would fix this issue in a significant story in The Wall Street Journal, published on August 6, 2022. Among the article’s points was that when current CEO Jim Farley took over in October 2020, improved quality was one of his primary goals. That was four years ago.
Nothing New to Say
A broken record.
Comments made quarter after quarter by Chief Financial Officer John Lawler are no longer believable. His most recent was, “We need to move faster, bottom line, and warranty needs to be a big part of that. We need to accelerate our pace to outrun what our competitors are doing.” These comments have become a broken record.
Ford is a wreck, and it continues to prove that regularly.
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