A Stumbling Ford Junks a Business

By Douglas A. McIntyre Published Oct 27, 9:30AM EDT

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A Stumbling Ford Junks a Business — © Carl Court / Getty Images News via Getty Images

Ford Motor Co. (NYSE: F | F Price Prediction) announced lackluster results for the most recent quarter. Revenue rose 10% to $39.5 billion. Its market share stayed flat at 4.9%. Perhaps that is what Ford considers progress. Ford’s management, unfortunately, guided toward the low end of previous forecasts. Pretax profits will be between $11.5 billion and $12. 5 billion for the year.

The most important news was well down the page in Ford’s press release. This is that its Argo AI autonomous car efforts will be junked. The write-off cost Ford $2.7 billion. Ford repeatedly has said it is enthusiastic about self-propelled cars, or what are known as autonomous vehicles. Management changed its mind at a great cost to investors.

Why did Ford decide to move out of the AI business? It is something one would think it learned earlier. Ford CFO John Lawler said, “It’s become very clear that profitable, fully autonomous vehicles at scale are still a long way off.” That puts Ford out of step with Alphabet’s Waymo, Tesla and Nvidia. Each is part of a remarkably successful company that knows the technology world better than Ford.

Ford has over 40,000 cars parked in lots because of supply chain management, which is a figure it disclosed earlier. It also missed its initial forecasts of expenses for the quarter by a massive $1 billion. One would think one of the largest car companies in the world would have caught the problem earlier.
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Ford’s estimates of costs have hurt it elsewhere. It missed its forecast of what components of its popular electric vehicles, the Mustang Mach-E and F-150 Lighting, would cost. Consequently, it raised prices on each of these by several thousand dollars. In a very competitive market, it is a good way to risk erosion in market share.
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Ford’s shares have had an unexpected, modest bounce recently. Nevertheless, they are down 38% this year. Some analysts believe that stock is at risk of another downturn because a recession will sap demand for cars and light trucks.
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Did Ford abandon self-driving cars too early? If so, it has cost investors a great deal of money already and will cost even more in the future.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.