On Feb. 4, Ford reported better-than-expected results for the fourth quarter of 2020 and said it would invest $29 billion in electric and self-driving cars by 2025.
Wall Street has been waiting for Ford to inject more money into these emerging technologies since GM announced last year that it would increase its investment in all-electric and self-driving vehicles to $27 billion between 2020 and 2025.
Ford said the plan includes $7 billion for self-driving cars and $22 billion for electric cars. After Ford announced a $11.5 billion investment in electric vehicles in 2022 (about $7 billion since 2016), Ford now plans to increase its investment by 2025 to $10.5 billion, a total of $22 billion.
Ford says most of the planned cars will be pure electric cars, but it also has hybrid and plug-in hybrid models that still carry traditional internal combustion engines. "Ford is in transition and our leadership in electric vehicle innovation and self-driving research and development is changing," Ford CEO Jim Farley said in a statement.
Fourth quarter results
Ford's results for the fourth quarter of 2020 were mixed. Here's a comparison between the final results and the Wall Street average forecast compiled by Refinitiv.
Adjusted earnings per share: 34 cents vs projected loss of 7 cents
Revenue: $33.2 billion vs forecasts $33.89 billion
Unadjusted, Ford lost $2.79 billion, or 70 cents a share, in the fourth quarter of 2020, compared with a loss of $1.67 billion, or 42 cents a share, in the same period in 2019.
Ford excluded $5 billion in special expenses from its adjusted quarterly profit. This includes $2.4 billion for suspension of production in Brazil as part of the restructuring of its South American operations, and $610 million for the recall of 3 million older cars because of possible problems with airbag inflating equipment; other costs include pension obligations and other restructuring measures.
Ford's fourth-quarter results were dominated by its North American operations, which contributed $1.1 billion of its $22 billion in revenue. With the exception of Europe's profit of $414 million, other markets reported losses, including a loss of $105 million in South America and a loss of $66 million in China.
For the whole of 2020, Ford lost $1.28 billion as a result of its global restructuring plan and the epidemic, and made a profit of $84 million in 2019. Revenue last year was $127.1 billion, down 18% from a year earlier.
John Lawler, Ford's chief financial officer, said he expected adjusted pre-tax profit of $8 billion to $9 billion and adjusted net cash flow of $3.5 billion to $4.5 billion in 2021. But this does not take into account the global shortage of semiconductor chips. The lack of cores could reduce Ford's adjusted net cash flow by $1 billion to $2.5 billion this year, Lawler said.
"the problems of semiconductors are constantly changing, so it is too early to try to measure their impact on full-year results," Lawler said in a statement. Now, according to suppliers' estimates, we may lose 10% to 20% of our production in the first quarter. "
Earlier on Feb. 4, Ford said it would slash production of Fmuri 150 pickup trucks at factories in Michigan and Missouri next week because of chip shortages.
Carmakers and parts suppliers began warning of semiconductor shortages at the end of last year. Earlier, the rebound in car demand was stronger than expected due to the factory shutdown for two months as a result of the epidemic.
Ford shares rose as much as 4% in after-hours trading on Feb. 4 before falling back to about $11.4, up less than 1%.
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