US Ford Turns to Deficit... "Reflects Losses from Argo AI Investment"

[Asia Economy Reporter Yujin Cho] Ford, the second-largest automaker in the U.S., returned to a loss in the third quarter due to rising parts costs from inflation and investment losses in autonomous driving technology.

On the 26th (local time), Ford announced in its third-quarter earnings report that it incurred a net loss of $827 million. Adjusted earnings per share were $0.30, slightly exceeding market estimates of $0.27. Revenue for the same period was $39.4 billion, a 10% increase compared to $35.7 billion in the same quarter last year.

Although semiconductor supply chain disruptions that have plagued the automotive industry since last year eased, boosting sales, unexpected parts shortages caused production disruptions, making a return to losses unavoidable.

The company explained that the return to a loss was due to reflecting investment losses ($2.7 billion) in the autonomous driving startup Argo AI.

CEO Jim Farley stated, "We made a strategic decision to shift our development focus from investing in the Level 4 full autonomous driving system developed by Argo AI to investing in our internally developed Level 2+ and Level 3 technologies," adding, "The third-quarter loss reflects the investment losses related to Argo AI."

Farley also said, "It has become clear that profitable fully autonomous vehicles are still far off," and "We concluded that we do not necessarily have to develop this technology ourselves."

Earlier, Ford had forecasted that due to parts shortages, it would be unable to deliver between 40,000 and 45,000 vehicles by the end of the third quarter. It warned that "parts prices have increased due to negotiations with suppliers," and that additional costs of about $1 billion could arise in the third quarter due to rising parts prices and shortages.

The outlook for performance after the third quarter is also not optimistic. Ford expects that demand contraction due to recessions in the U.S. and Europe and delays in supply chain normalization will negatively impact results.

Ford CFO John Lawler said during the conference call after the earnings announcement, "We believe there is a high possibility that the U.S. will enter a recession next year," and "Europe may experience a deeper recession."

Meanwhile, Ford announced that it has agreed to sell its 49% stake in its Russian joint venture Sollers Ford, signaling its withdrawal from the Russian market. Since Russia's invasion of Ukraine in February, Ford has suspended operations at its Russian plant.

This content was produced with the assistance of AI translation services.