27 August 2024

“Overall, the EV journey has been humbling,” Ford CEO Jim Farley has said. Last week, it scrapped plans for a three-row electric SUV, taking a $1.9bn hit, and also said it would cut the share of capital spending dedicated to EVs from 40% to 30%. Last month, the OEM reported a $1.1bn quarterly loss from its Model e electric car division. It expects to lose between $5bn and $5.5bn for the full year.

The American giant has backed away from an earlier target of turning a profit on EVs in 2026.

Ford has also been setting aside increasing amounts for warranty claims, rising from $4.8bn in 2014 to $11.5bn in 2023. The amount Ford has paid out each year for repairs has also grown, from $2.9bn to $4.8bn, reports the FT. Issues involve models launched as long ago as 2016.

Last month, Ford missed Q2 earnings expectations after an $800m jump in warranty costs. This saw its stock slide 18%, its biggest one-day drop since 2008.

Ford revealed it is working with retailers to address quality problems; for the past year, the OEM has been requiring retailers to report problems on vehicles that customers brought in within three months of purchase. Farley has also held back launches to improve quality, something Morningstar praised as “the right course of action”.

Even so, the “double blow” of EVs and warranty claims has “raised sharp questions about its strategy, execution and shareholder returns,” reports the FT.

Tags: EV, Ford