Ford, GM juggle today’s challenges with tomorrow’s promises By Reuters


2/2

© Reuters. FILE PHOTO: Ford CEO Jim Farley poses with the all-electric Ford F-150 Lightning pickup truck during the unveiling at the company’s world headquarters in Dearborn, Michigan, U.S., May 19, 2021. REUTERS/Rebecca Cook/File Photo

2/2

By Joseph White and Paul Lienert

DETROIT (Reuters) – General Motors Co (NYSE:) and Ford Motor (NYSE:) Co are expected to report next week they turned solid profits for the last quarter of 2021, but rarely has past performance mattered less to investors.

The two Detroit automakers are in mid-leap between a combustion-powered present, and a future they have promised will be defined by electric vehicles and software-powered services.

Both companies have mapped out multibillion-dollar investments in new North American electric vehicle and battery factories, aimed at challenging Tesla (NASDAQ:) Inc and a flock of smaller EV startups in the still-tiny market. But those new factories will not be at full speed until the middle of this decade.

Though GM and Ford were once giants of the global auto sector, their market capitalizations have been dwarfed by EV maker Tesla. Tesla on Wednesday reported stronger than expected revenue and profit for the fourth quarter of 2021, but warned that supply-chain bottlenecks would continue through 2022 and likely prevent its factories from running at full capacity.

GM last year sold fewer vehicles in the United States than Toyota Motor (NYSE:) Corp, the first time in 91 years that GM was not the No. 1-selling automaker in its home market.

GM and Ford’s profits in 2021 were lifted by consumers willing to pay record-high prices for petroleum-powered pickup trucks and SUVs. In 2022, analysts are concerned the Detroit manufacturers will face a more uncertain economic environment, including rising interest rates, high oil prices and continuing supply-chain bottlenecks that could curtail production.

Analysts expect both companies to be cautious in their outlooks for 2022. Shortages of semiconductors are expected to weigh on production into the second half of the year, Bank of America (NYSE:) wrote in a note.

“While automakers will enjoy production recovery and inventory restocking, (those) could be coupled with price declines, mix deterioration, rising input costs,” Morgan Stanley (NYSE:) said.

Ford told investors in its third-quarter report that it expected $1.5 billion in higher commodity costs, and saw inflationary pressures across a broad range of expenses.

Wall Street has shown more confidence over the last several months in efforts by Ford’s CEO, Jim Farley, to accelerate the company’s electric pickup truck and van programs. Ford’s market value hit $100 billion in mid-January, exceeding GM’s value for the first time in more than five years. But the market value of Ford, whose quarterly results are expected on Thursday afternoon, has since dropped by 20% after the company issued a complicated reworking of its 2021 profit guidance.

GM Chief Executive Mary Barra is expected to have a more straightforward story to tell on Tuesday about fourth-quarter and full-year results. GM Chief Financial Officer Paul Jacobson told investors in December the company expected adjusted pretax profit for 2021 to reach $14 billion, higher than previous forecasts.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Share

Leave a Reply

Your email address will not be published.

GIPHY App Key not set. Please check settings