Shares of Ford Motor
The stock closed down more than 12% on Friday.
Ford reported its third-quarter results after the markets closed Thursday, and they weren’t what Wall Street had expected. Ford’s revenue and profit both fell short of analysts’ estimates, shortfalls that executives attributed to lost production following the United Auto Workers’ decision to strike three of Ford’s key U.S. factories, including an important truck factory in Kentucky.
Ford on Wednesday night became the first of the three Detroit automakers to reach a tentative agreement with the UAW. It won a surprising concession that should help its fourth-quarter numbers: Striking workers will return to their jobs before the new deal is officially ratified.
But Ford’s new contract will be an expensive one. Chief Financial Officer John Lawler said the UAW deal, if ratified by members, will add $850 to $900 in costs to every vehicle assembled in the U.S. That will put additional pressure on CEO Jim Farley’s ongoing efforts to improve Ford’s costs and quality.
Ford also said it plans to delay about $12 billion in previously announced spending on EV manufacturing capacity, saying that its customers in North America are no longer willing to pay a premium for an EV vehicle versus a comparable internal-combustion or hybrid alternative.
While executives emphasized Ford isn’t cutting back on or delaying its plans to develop a range of more advanced EVs, investors concerned about the company’s ability to compete with Tesla and other new EV entrants were given a new reason for caution.
Ford also withdrew its previous financial guidance for 2023 in light of the pending deal with the UAW.
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