Ford Motor Co. (NYSE: F) already has a long list of problems. First among these is its management cannot forecast major expenses. This has caused unexpected price increases for its two flagship electric vehicles (EVs). Ford’s other primary problem is quality issues. This second problem could bedevil Ford for years. Ford CEO Jim Farley recently told some of its retired engineers that the car company would not solve these problems for years. This represents a major revenue challenge.
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Farley commented on the quality problem when he addressed the Ford Retired Engineering Executives group members: “It is the most important initiative in the whole company. And it’s going to take several years. We didn’t lose it in just one or two years. Until we fix quality, nothing else matters.” Ford Authority made a long list of the worst troubles. This included poor grades in the Consumer Reports reliability study and particular problems for its Lincoln models.
Ford’s management has said repeatedly that EVs are the most critical products for a successful future. It had discovered that it underestimated the cost of building these. Consequently, it has raised the price of its two most important EV models, the Mustang Mach-E and Ford F-150 Lightning. Consumers expect to pay the price that Ford announced when it launched the models. Higher sticker prices cause frustration and make buyers look elsewhere for competing products. Ford is unlikely to get back most consumers who leave.
The quality and pricing issues have driven shareholders away. Ford’s stock is down 41% this year. This spells trouble for Farley. The Ford family does not suffer CEO mistakes very well. It has replaced chief executives at a fairly rapid clip over the past two decades.
24/7 Wall St.Farley’s admission makes the obvious point that quality improvements at a huge manufacturer cannot happen overnight. In the meantime, Ford suffers.
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