Ford Motor Co. announced strong Q1 2023 results, posting a net income of $1.8 billion, a significant turnaround from a $3.1 billion loss the previous year. The company’s first-quarter revenue grew by 20%, reaching $41.5 billion, fueled by a 9% increase in vehicle shipments, improved sales mix, and higher net pricing. Adjusted earnings before interest and taxes (EBIT) rose by 45% to $3.4 billion, with Ford Blue, the gasoline-powered business, contributing $2.6 billion.
Ford Model e Shines, But Burns Cash
Ford’s commercial business, Ford Pro, generated $1.36 billion, while the electric vehicle (EV) business, Model e, reported a loss of $722 million. Despite the losses from the EV segment, company officials remain optimistic as they expect losses to increase to $3 billion this year, while Ford Blue is projected to make around $7 billion and Ford Pro, $6 billion. Ford reaffirmed its full-year guidance, targeting an adjusted EBIT of $9 to $11 billion and around $6 billion in adjusted free cash flow.
Ford dropped prices for its all-electric Mustang Mach-E for the second time this year. Tesla’s massive price drops have put pressure on Ford, with the Model Y now being more affordable than the base Mach-E. On the other hand, Ford still dominates electric trucks. With no real competition until the Silverado EV arrives, the F-150 Lightning has seen half a dozen price hikes. It now starts $15,000 higher than it did one year ago.
Earnings Better Than Expected
The company’s Q1 results exceeded Wall Street expectations, with revenue reaching $41.5 billion, up 20% from the previous year, and surpassing the anticipated $36.1 billion. Earnings per share were also higher than expected at $0.63, compared to the $0.41 predicted by analysts. In Q1, Ford’s EV sales increased by 41% year over year to 10,866 units, while hybrid sales dipped by 4% to 27,064 units.
Ford Blue’s strong performance yielded $25.1 billion in revenue, $2.623 billion in EBIT, and a 10.4% EBIT margin. Ford Model e reported $700 million in revenue, an EBIT loss of $722 million, and a -102% EBIT margin. Meanwhile, Ford Pro generated $13.2 billion in revenue, $1.366 billion in EBIT, and a 10.3% EBIT margin.
Ford is optimistic about the future of its EV business, targeting a production run rate of 600,000 units by the end of 2023 and 2 million by 2026. Ford sold nearly 16,000 F-150 Lightning electric trucks in 2022, the first year of sales. The company expects Model e to reach break-even status by year-end and aims for an 8% EBIT margin by late 2026. Ford plans to increase production of various models, including the Ford Transit and E-Transit vans, Mustang Mach-E, F-150 Lightning, Bronco Sport, and Maverick pickup, to meet Q1 demand.