Ford shares fall 11% on quality issues, electric vehicle business

Ford has the highest recall rate among automakers in the industry, which has deterred not only drivers considering buying its products but also investors. Ford’s stock fell 11% after it reported disappointing financial results, which the company blamed on rising warranty costs.

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Ford, which incurred an $800 million increase in costs to fix quality defects after registration in the second quarter, reported net income of $1.83 billion, or 46 cents per share, in the second quarter, compared with $1.92 billion, or 47 cents per share, in the April-June 2023 period. Analysts expected second-quarter earnings of 68 cents per share. American Financial Channel report.

RELATED: Ford Recalls More Vehicles in 2024 Than GM, Honda, Toyota, Nissan, Volkswagen, and BMW Combined

So far this year, Ford Motor Company has recalled 31 vehicles, involving 3.66 million vehicles; Tesla, which ranks second in quality issues, has only recalled 8 vehicles, involving 2.55 million vehicles; Ford’s largest competitor, General Motors, has only recalled 656,000 vehicles.

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Warranty costs weren’t the only factor weighing on Ford’s results. The company’s Model E electric car unit lost $1.1 billion in the last three months as Ford and other automakers struggle with a market for electric vehicles that hasn’t matured as much as they’d hoped. That loss was at least smaller than the $1.3 billion it lost in the first quarter.

Ford is currently developing a small, affordable electric vehicle platform that the company says will produce a $30,000 electric vehicle by the end of the decade and has delayed plans to build larger electric vehicles. Last week, the company announced it will build its lucrative Super Duty internal combustion trucks at a plant in Ontario that was previously designated for the battery-powered Explorer and Lincoln Aviator.

Although Ford’s net income fell, overall revenue rose 6% to $47.81 billion, and some divisions had good performance. Ford Pro Commercial Division earned $2.6 billion, a profit margin of 15.1%, while Ford Blue (Ford’s traditional automotive division responsible for handling internal combustion engine vehicles) earned $1.2 billion.

Source: CNBC

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