There are two intertwining subplots going on here. The first is that the paradoxically bullish effects of the pandemic on the legacy US autos business are waning (or “normalizing,” to use analysts’ euphemism). Disruptions to supply chains combined with a relatively swift economic rebound made for a situation very unfamiliar to Detroit: booming demand and sparse dealer lots. Ford and General Motors Co. earned more in the past two years than the prior four.
Elon Musk got what he asked for: Ford Motor Co has officially joined the electric vehicle price war. The collateral damage to Tesla Inc. could be brutal.
Ford reported results late Tuesday. The short story is that it blew past earnings estimates, mostly because of good margins in the North American business (read: US drivers still love F-150 trucks). But it only reiterated guidance for the full year, meaning Ford’s faith in those drivers’ fortitude is slipping. Moreover, now that Ford reports its electric business separately, everyone can see it made a less-than-princely operating margin of negative 102% on EVs in the quarter.
