In the words of Larry the Cable Guy: "I don't care who you are, that's funny right there".
From Barron's, December 16:
Ford Stock Rises After It Takes a Huge EV Charge. Here Is the Good News.
A lot of the capital spent developing all-electric vehicles for the U.S. market is going to money heaven. It will never produce the returns that companies and investors once hoped for.
Ford Motor is the latest example. On Monday, it announced a major pivot toward hybrids and away from all-electric cars. “Ford is following the customer,” said Andrew Frick, president of Ford Blue and Ford Model e.
Blue is Ford’s traditional gasoline-powered business, while Model e makes EVs.
Consumers want the benefits of electrification, but also want affordability and to be confident about how far a vehicle will be able to travel, he said. Looking ahead, Ford expects electrified vehicles to account for 50% of sales by 2050.
That includes “extended range electric vehicles,” battery-powered cars that have an onboard generator, running on gas, that recharges batteries on the fly. There will be an EREV F-150 truck in the future, but Ford isn’t planning to make a battery-only version of its best-selling vehicle.
The pivot will have some pain. Ford is also taking $19.5 billion in one-time charges. That is a lot, considering the company typically spends about $9 billion a year on new plants and equipment and another $8 billion on engineering, research, and development.
The $19.5 billion in charges includes $8.5 billion in EV asset write-downs, $6 billion in charges related to the Blue Oval SK battery joint venture, and $5 billion in “additional program-related expenses.”
Those figures include $5.5 billion in cash that the company plans to spend in the future on the JV and program expenses.
The charges are necessary, according to Frick. Large EVs have “no path to profitability,” he said, adding Ford is focused on developing “affordable” all-electric cars. Ford still plans to launch a midsize electric truck in 2027.
Ford’s Model e division is expected to be profitable by 2029. The division lost $1.2 billion in the third quarter.
Along with the EV decision, Ford updated its 2025 financial forecasts. The company expects to earn about $7 billion in operating profit in 2025, up from a prior call of between $6 billion and $6.5 billion. The new figure implies a fourth-quarter profit of about $1.3 billion, compared with the $662 million forecast by analysts, according to FactSet.
That is a silver lining for investors....
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