Ford’s (NYSE: F) stock has been down since its last earnings announcement, part of a long-term trend. Shares are down 20% in two years, while the S&P is up 50% in that period. Shares in crosstown rival General Motors are up 37%.
Ford’s problems center around two issues. The first is its failure in the EV market after large investments and forecasts of tremendous success. The other is quality and warranty issues, which have cost hundreds of millions of dollars and undermined earnings.
In Ford’s two most recent quarters, warranty costs were specifically mentioned as part of its financials. When Ford announced earnings in July, The Detroit Free Press noted, “Recurring quality problems have driven up Ford’s warranty costs for years, but an $800 million spike in the second quarter caught investors by surprise.”
The National Highway Traffic Safety Administration recently hit Ford with a $165 million penalty because it “…found the company failed to recall vehicles with defective rearview cameras in a timely manner and failed to provide accurate and complete recall information…”
Ford said it would invest $30 billion to become an EV industry leader. Instead, it has lost so much money that it lost almost $150,000 for each EV it sold earlier this year. It has cut production of its flagship EV, the F-150 Lightning, and sharply cut plans to produce hundreds of thousands of EVs per year.
Ford has to fix at least two significant problems to get its stock to start a recovery.
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