It’s been just three days since I last wrote about the destructive mismanagement at Ford Motor Company, so I promise to give it a rest for a little while after today. But since I wrote and uploaded my EV roundup last week, there has been a cascade of awful news for Ford and its EV-loving CEO, Jim Farley.
Ford’s Q2 2024 financial results were just released, revealing a massive decrease in earnings, including a 6-month year-to-date loss on its electric vehicle debacle of $2.5 billion – this after Ford lost $4.7 billion on EVs in 2023. Ford’s stock price is in free fall, plunging 20% last week alone. Wall Street analysts were blindsided by the depth of Ford’s financial catastrophe.
Perhaps most telling is that warranty claims on Ford’s legacy gasoline-powered vehicles have spiraled out of control. This is not by accident. Mr. Farley deliberately sabotaged the legacy ICE (internal combustion engine) business a few years ago by gutting the engineering and design staff that had successfully made the F150 America’s most popular vehicle, as I’ll re-visit in just a moment. But first, here are some of the stories that came out late last week.
Ford shares fell sharply late on Wednesday after the carmaker reported second-quarter earnings far below analysts’ expectations, citing an unexpected spike in costs for fixing faulty cars under warranty.
Shares of Ford fell more than 11% in after-hours trading Wednesday after the automaker reported much weaker than expected earnings. The company said it was compelled to set aside more money to cover the cost of repairing customers’ vehicles.
The company’s adjusted net income fell $1 billion to $1.9 billion, or 47 cents a share. That badly missed analysts’ forecasts of earnings per share of 68 cents a share.
Aside from the surging warranty costs related to Ford’s neglected ICE products, the EV losses continue to worsen…
Ford’s model e unit lost another $1.1 billion in the second quarter. Ford Model e revenue fell to $1.3 billion, while volume was down 23% in Q2. Ford’s EV losses reached $2.5 billion through the first half of 2024. The higher losses are due to lower volume and industry-wide pricing pressure.
Ford successfully “sold” a record number of EVs in Q1 of 2024, but at a tremendous loss, due to fire-sale pricing in order to reduce its glut of unsold EVs. But sales plummeted again in Q2, with EV revenue falling off a cliff.
Over the past several years, Jim Farley and his band of merry destructors at Ford have sought to fund their EV misadventure by slashing the payroll of Ford’s profitable ICE division. In a manner that the cost-cutters at Boeing would recognize, Farley eliminated engineers who had critical roles in the quality of Ford’s popular gasoline-powered vehicles:
Up to 8,000 Ford employees could be hit by job cuts, according to a Wednesday report from Bloomberg. The move could be part of a plan to cut $3 billion in operational costs from the company's gasoline-powered business operations in order to boost profit and invest more into Ford's electric-vehicle endeavors.
It wasn’t just a one-time purge in 2022. Farley made it clear how contemptuous he was toward engineers whose skill set was for ICE vehicles.
“Ford Employs 25 Percent More Engineers Than Needed: Farley” [Ford Authority – 02/06/2023]
Mere days after Farley expressed frustration with Ford’s disappointing 2022 financial performance – which was aided by the automaker’s overstaffing issue – the executive has noted that the company employs 25 percent more engineers than it needs...
As the EV debacle worsened, Ford continued to cut deeper into its brain trust of legacy ICE employees, with another wave of engineers let go in 2023.
“Ford targets US and Canadian engineers in latest wave of layoffs” [The Verge – 6/27/2023]
A new wave of layoffs primarily targeting Ford Motor employees in engineering roles in the US and Canada are expected to take place this week as part of the company’s latest cost-cutting efforts. Leaders of the teams impacted by the job cuts received confirmation on Monday,
Jim Farley’s commitment to electric vehicles, and his efforts to sabotage Ford’s successful line of gasoline-powered vehicles, can be likened to an overseas explorer of centuries past who scuttles his ship upon reaching foreign shores. By destroying the vessel that brought his crew to this place, he is making the point that Ford cannot return to where it came from. It must succeed in its new journey as an EV company, or it will be allowed to fail.
Unfortunately, Ford will not succeed as an EV company. By allowing Farley to continue down this path, Ford’s board of directors is assenting to the failure of this once great company. It’s not too late to save Ford, but it cannot be saved with a CEO who is willing to destroy the company rather than retreat from a colossal mistake.
[buck.throckmorton at protonmail dot com]