Ford Motor Co. has announced its plans to introduce a competitor to Tesla’s upcoming “Model 2” electric vehicle (EV), causing its stock to soar by over 6%. The carmaker reported quarterly revenue that exceeded Wall Street’s expectations and emphasized its commitment to offering customers a wide range of choices between gas, hybrid, and electric vehicles. This move is seen as a direct challenge to competitors General Motors and Tesla.
Ford’s Chief Executive, Jim Farley, expressed optimism about the company’s future, stating that although 2023 was a solid year for Ford, there is much more to come. He highlighted Ford’s focus on growth, profitability, and revenue. Farley also mentioned that Ford will invest less capital in larger EVs and focus on smaller EVs built on a next-generation platform. He acknowledged the competition from affordable Teslas and Chinese original equipment manufacturers (OEMs) and stressed the importance of cost reduction in maintaining competitiveness.
Investors responded positively to Farley’s message, with shares continuing to rise during the call. Analysts believe that strong demand for Ford’s combustion trucks and SUVs in North America, along with ongoing cost-cutting measures, have encouraged investors. Ford’s commitment to returning cash to shareholders has also been well-received.
In terms of financials, Ford reported a loss of $526 million in the fourth quarter, compared to earnings of $1.3 billion in the same period the previous year. However, after adjusting for one-time items, the carmaker’s earnings per share exceeded expectations. Revenue also increased to $46 billion, surpassing forecasts.
Looking ahead, Ford aims to improve its capital efficiency by selectively reducing investments and increasing the expected returns of approved initiatives. The company has identified approximately $2 billion in cost reductions across various areas such as materials, freight, and manufacturing. Ford has provided guidance for adjusted earnings before interest and taxes (EBIT) between $10 billion and $12 billion in 2024, with adjusted free cash flow of $6 billion to $7 billion. Capital expenditures are expected to range from $8 billion to $9.5 billion.
Ford’s unit focusing on fleet and commercial customers, Ford Pro, is projected to achieve an EBIT of at least $8 billion to $9 billion in 2024. Meanwhile, Ford Blue, the unit dedicated to traditionally powered vehicles, is expected to generate about $7 billion to $7.5 billion in EBIT. The company anticipates an EBIT loss of $5.0 billion to $5.5 billion from its EV unit.
Alongside its financial announcements, Ford declared a regular dividend of 15 cents per share and a supplemental dividend of 18 cents per share for the first quarter. These dividends will be paid out on March 1 to shareholders of record on February 16.
Despite Ford’s stock performance being down approximately 8% over the past year, compared to a 20% gain for the S&P 500 index, the company’s recent announcements and strategic plans have generated optimism among investors. With the introduction of a competitor to Tesla’s Model 2 and a focus on cost reduction and profitability, Ford appears poised for a promising year ahead.
