Ford's Back to the Future EV Concept

After shattering Wall Street's earnings expectations and raising guidance last week, Ford Motor F unveiled a custom truck that is a blend of its past and its electrified future during the Las Vegas SEMA Show. The Ford F-100 Eluminator concept truck has the retro-styling of a 1978 F-100 pickup while being powered by electric motors and batteries from the 2021 Mustang Mach-E GT Performance Edition.

The Electric F-150 is Coming

The reveal comes as it prepares to launch its highly anticipated F-150 Lighting Pickup that is scheduled to hit the road during the first half of 2022. This world's eyes are on this particular pickup as this model is undoubtedly America's favorite vehicle and therefore, its electrified version will be used to judge if consumers are ready switch to electric vehicles.

F-100 Eluminator concept is merely a preview of how Ford plans to embrace an all-electric future with zero-tailpipe emissions performance while honoring its heritage vehicles. This vehicle was built to showcase its new "e-crate motor" that is assembled by the company but can also be purchased to build, fix or customize vehicles.

Third Quarter Results

Last week, Ford nearly doubled Wall Street's earnings expectations and slightly beat revenue estimates due to the increased availability of semiconductor chips and higher vehicle shipments. But its automotive revenue was still down 5% during the quarter compared with $34.7 billion in 2020's comparable quarter.

On an unadjusted basis, Ford's net income was $1.8 billion compared with $2.4 billion a year earlier, when dealerships and plants largely reopened after being closed for a part of the second quarter due to the ongoing pandemic. Pretax adjusted earnings amounted to $3 billion, dropping from $3.6 billion Ford made in last year's comparable quarter.

New Guidance

A strong quarter fueled the legacy automaker to increase its annual guidance for the second time this year. The upgraded guidance is in the range of $10.5 billion and $11.5 billion, whereas it was previously expected to be between $9 billion and $10 billion. Adjusted free cash flow expectations were maintained in the range between $4 billion and $5 billion.

Ford also announced it will be reinstating its regular dividend as of the fourth quarter, more than 18 months since it stopped the payments due to the global health crisis that paused economies across the globe.

Due to strong demand for newer products such as the Bronco SUV and Mustang Mach-E, Ford believes it can reach 200,000 units in sales globally per year.

Supply Challenges

The Blue Oval declined to give financial guidance for 2022, but the CFO John Lawler said the company expects the chip shortage to continue into next year and potentially, to a far lesser extent, into 2023. Lawler expects commodity costs to increase $3 billion to $3.5 billion for the full year. Moreover, there could be another $1.5 billion increase in the cards for 2022.

Ford's largest American rival, General Motors GM, reported third-quarter earnings Wednesday morning that also beat Wall Street's estimates, but its stock declined by more than 5% during intraday trading due to a lowered cash flow guidance for the year and failing to meet some investor expectations for the remainder of the year.

Automakers across the globe, both ICE and electric ones, are facing supply disruptions. On November 1^st, Nio Inc NIO revealed its deliveries to customers in October fell sharply due to supply chain issues and changes to its manufacturing lines due to restructuring and product upgrading. Nio said it delivered 3,667 vehicles in October, which is 65% compared to September. Xpeng Inc XPEV experienced a 2.6% month-on-month decrease in October as it delivered more than 10,000 cars for the second month in a row. On the other end of the spectrum, Li Auto LI was the only company of the three to deliver more cars in October than September. October deliveries of its sports utility vehicle totaled 7,649, increasing almost 8% month-on-month.

A Delay in Sight

Ford announced it will postpone the launch of its BlueCruise hands-free highway driving system from the end of 2021 to the first quarter of 2022 to simplify the technology. This venture is a potentially new source of recurring revenue that could enable Ford to catch up with GM and the EV king itself, Tesla Inc TSLA, in this segment.

Takeaway

According to CEO Jim Farley, Ford's results show the underlying strength of its legacy business that is on track to drive growth and unlock unprecedented value. Besides the favorable change in the slope of earnings and cash flow, Farley promised there's more to come as the legendary Blue Oval is taking its legacy models back to the all-electric future.

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