Advertisement
OPINION

Updated February 7th, 2024 at 12:12 IST

Ford gives cause to not chase Tesla

Unlike General Motors, Ford’s has opened up on its rivers of battery-powered red ink.

Reuters BreakingviewsJonathan Guilford
2024 Ford Endeavour to re-enter India's SUV vertical
2024 Ford Endeavour to re-enter India's SUV vertical | Image:2024 Ford Endeavour
Advertisement

Danger: low voltage. Ford Motor wants investors to have its cash. The Detroit-based automaker announced an extra dividend on Tuesday, the flipside to scaled-back spending on money-losing electric vehicles. Unlike cross-town rival General Motors, Ford’s decision to disclose its rivers of battery-powered red ink makes clear that its horizons may need to shrink further. For investors, that's a boon.

Fueled by its combustion- and, increasingly, hybrid-engine business, Ford beat expectations in fourth-quarter results. Like GM, Ford doesn’t think recently increased wages will leave a scar. Expected operating profit of $10 billion to $12 billion in 2024 shows room for growth from 2023's $10.4 billion. And, again like its archnemesis, Ford is using its core strength in combustion engines to offset the pain of bad electric news by spreading the wealth. Shares rose roughly 6% after-market.

Advertisement

Where Ford differs from GM is in allowing investors a closer look under the hood of its electric business. Losses per car of over $46,000 are up by a quarter from the prior three months alone. Little wonder the company postponed a planned battery plant, shrunk another, and cut an international joint venture.

Boss Jim Farley promises next-generation vehicles will be profitable at launch. But the message is clear: Investments won’t happen “until they’re justified by demand,” and its electric business must stand on its own. The unit serves a purpose no matter what – one battery-powered ride sold leaves room under government emissions rules to offload a dozen gas-powered cars without incurring penalties. But Ford is paving a road away from the narrative that it will have to become the next Tesla, or wither.

Advertisement

Published February 7th, 2024 at 12:12 IST

Your Voice. Now Direct.

Send us your views, we’ll publish them. This section is moderated.

Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Whatsapp logo