Ford aims to leverage EV growth for turnaround amid headwinds

DETROIT — Ford Motor Co. believes its newest product, the F-150 Lightning, can be transformational.

But the automaker still has plenty of work ahead to realize the battery-powered pickup's potential and become the industry-leading electric-vehicle purveyor that CEO Jim Farley envisions.

Ford's first-quarter earnings were down year-over-year — even setting aside a $5.4 billion loss on its investment in Rivian — as the automaker struggled with lingering supply chain issues tied to the global semiconductor shortage. The company also cut nearly 600 salaried and agency jobs, a hint of more changes to come as it works to add new talent amid a sweeping reorganization.

Executives believe, however, that the production challenges that have stunted Ford's growth since 2020 could soon ease, and that its revamped product portfolio is exactly what the market wants.

"We haven't really had any open-field running, so to speak, in probably two years," Executive Chair Bill Ford told reporters at an event marking the start of Lightning production this week. "But the good news is our order banks are full and the demand is very high for our products. I feel very confident we can deliver what we said we're going to."

The automaker plans to ramp up Lightning production to a run rate of 150,000 vehicles annually by next year. It expects to become the No. 2 EV maker, behind only Tesla, in the next two years with volume of 600,000 EVs globally, and then challenge for the top spot later this decade.

Ford, already cutting into Tesla's market share with the Mustang Mach-E, effectively has the mainstream, full-size electric pickup market to itself until the Chevrolet Silverado EV arrives in about a year, a window of opportunity that could pay dividends in a lucrative segment. The two electric pickups already on sale, the GMC Hummer EV and Riviant R1T, are more niche, luxury vehicles.

Executives say the Lightning's price point, capabilities and new features are helping Ford bring in customers that otherwise wouldn't consider the brand. The pickup starts at $41,769 including shipping.

"It's going to vault them into a leadership role just from a volume standpoint," Jessica Caldwell, executive director of insights at Edmunds, said in an interview. "It's not just going to be a Tesla-run market. Ford's really setting up for the future, but it's going to be rough getting through this period of inventory issues and then satisfying all that deferred demand."

Ford has about 400,000 customers waiting for vehicles — representing $17 billion in revenue — that it can't yet sell because of the ongoing microchip shortage.

The company said this week one issue with a semiconductor module on a windshield wiper scuttled sorely needed production of its profitable Expedition and Lincoln Navigator SUVs. Ford's wholesale shipments fell 9 percent to about 970,000 from January through March.

The company has about 53,000 vehicles sitting around waiting for chips or related components

"The capability of this business is much stronger than what we were able to provide in the quarter," CFO John Lawler told reporters.

Ford this week said its first-quarter adjusted earnings before interest and taxes fell 41 percent from a year earlier to $2.3 billion, and revenue fell 5 percent to $34.5 billion. After accounting for the value of its Rivian stake falling by more than half, Ford posted a net loss of $3.1 billion.

Still, the automaker reaffirmed full-year guidance of $11.5 billion to $12.5 billion in adjusted EBIT, which would mark a 15 to 25 percent rise from 2021. That's because Ford expects the chip shortage to get better in the back half of the year, leading to production volume increases of 10 to 15 percent over 2021 levels.

"The second half is very critical for us," Farley said on Ford's earnings call. "We have the opportunity to build at volumes we haven't had for a while, and we have a lot of great, fresh products. A lot of costs coming into the business, but the second half is really critical for the company."

Farley said Ford built more than 2,000 Lightnings in the first few weeks of production at the Rouge Electric Vehicle Center in Dearborn, Mich., and that the first ones soon will be delivered to commercial businesses.

Ford already has increased the amount of planned production twice, from an initial capacity of 40,000 Lightnings a year to 150,000.

"The fact this vehicle has gotten so much interest and triggered Ford to increase planned production capacity is an indicator that perhaps the mainstream is really ready for EVs," Sam Abuelsamid, principal analyst at Guidehouse Insights, said in an interview. "In the context of the time, I think it certainly has the potential to be transformative."

Bill Ford likened the launch to that of the Model T.

"Back then, we were the first company to bring automobiles to everybody," he said. "Now, we're the first company to build electric trucks for everybody — way ahead of anyone else."

The company also plans to build a second electric pickup at the Blue Oval City complex in Tennessee planned to open in 2024. In addition to microchips, the automaker will need a steady supply of batteries and raw materials such as lithium, although officials say they have secured enough to meet short-term goals.

"They have a great product lineup that people really seem to want," Abuelsamid said. "If they can get past the supply chain issues, they're probably set up pretty well."