The Detroit automaker also pulled its 2023 forecast, citing “uncertainty” over the pending ratification of its new labor deal with the United Auto Workers (UAW) union, which is expected to significantly increase labor-related expenses.
Ford cautioned about ongoing challenges in its EV business and said it was cutting production of its Mustang Mach-E while scaling back about $12 billion in investments in the segment, including delaying its second battery plant in Kentucky.
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“We believe that the rise in battery raw material costs has negatively impacted the outlook for BEV (battery electric vehicles) profitability, and consequently, Ford’s profitability,” Wells Fargo analysts wrote in a note.
The company’s quarterly report added to the gloom around the EV market, which has seen consumers pull back on some purchases due to high inflation.
Ford on Thursday said its EV unit posted a quarterly loss in earnings before interest and taxes (EBIT) of $1.33 billion, compared with an EBIT loss of $1.08 billion in the second quarter.
On Wednesday, the UAW and Ford reached a tentative agreement that entails a 25% wage increase for 57,000 workers over a span of nearly five years, effectively putting an end to the strike at some of the automaker’s largest factories.
Ford expects the new contract to add $850 to $900 in labor cost per-vehicle, Chief Financial Officer John Lawler said in a briefing on Thursday.
The automaker has lost about $4.32 billion in market cap throughout the duration of the strike, according to LSEG data.
General Motors, a rival that has not yet reached an agreement with UAW, withdrew its 2023 results forecast earlier this week and revised its frequently stated goal of producing 400,000 EVs by mid-2024.