Shares fall after Ford (F) cuts FY23 forecast on wider EV losses
Ford Motor (NYSE: F) shares plummeted 6% during Friday's pre-market trading session following a report of increased losses in its electric-vehicle (EV) division.
The Detroit automaker attributed the losses to intensified competition triggered by Tesla's (NASDAQ: TSLA) aggressive pricing strategies.
Additionally, Ford retracted its 2023 projection, citing uncertainties surrounding the pending approval of its new labor agreement with the United Auto Workers (UAW) union. The agreement is expected to significantly elevate labor-related costs.
The striking United Auto Workers (UAW) and Ford came to a preliminary agreement on Wednesday involving a 25% wage hike for 57,000 employees spread out over nearly five years. This resolution effectively ended a six week long strike at several of the company's major factories.
During a briefing on Thursday, Chief Financial Officer John Lawler indicated that Ford anticipates the new contract to result in an additional labor cost of $850 to $900 per vehicle.
Ford also warned of persisting difficulties in its EV sector. The company revealed plans to reduce the production of its Mustang Mach-E and curtail approximately $12 billion worth of investments in this segment. This decision includes postponing the construction of its second battery plant in Kentucky.
The company's latest quarterly report added to the negative sentiment in the EV market. Consumers have been spending less on EVs due to rising inflation. Ford reported a $1.33 billion loss in EBIT for its EV unit, up from a $1.08 billion loss in the previous quarter.
Shares of F are down 8.85% in mid-day trading on Friday.
By Michael Elkins | [email protected]