In the race to come up with a credible electric-vehicle strategy, Ford F -11.31% has caught up with and arguably even overtaken General Motors GM -4.61% over the past year. But that isn’t likely to be the last twist in a contest that could take a decade or more to produce clear winners.
Ford reported underwhelming fourth-quarter results after the bell Thursday, sending the shares 4% lower in after-hours trading. Net income for 2021 was a spectacular $17.9 billion, but roughly half of that was a paper gain on its stake in electric-truck startup Rivian, which completed its initial public offering in November. The value of that investment has shrunk by about 40% in this year’s selloff, and underlying profits were lower than analysts had forecast.
The company’s outlook was mixed. This year it expects growth in deliveries to dealers of 10% to 15%—well below the 25% to 30% projected by GM on Tuesday—but, unlike GM, Ford expects a substantial increase in profits. The company’s margins are still lower than its key Detroit competitor’s, which does have the benefit of giving it more room for improvement.
Neither the fourth-quarter performance nor the outlook are likely to change longer-term investor perceptions of Ford, which are grounded in its recent success in rushing electric vehicles to market. The Mustang Mach-E was the bestselling EV in the U.S. last year not made by Tesla, ahead of GM’s Bolt, which was recalled due to a fire risk. And Ford’s electric version of its popular F-150 pickup truck will come out well before GM’s electric Silverado.
Ford was able to launch EVs fast because it leaned heavily on existing conventional models. GM has taken a cleaner sheet of paper in designing its own EV range, including a purpose-built battery platform.
This could mean GM overtakes Ford next year and beyond as the benefits of a more comprehensive approach play out, but this isn’t a sure thing either. The specifications GM has given for its Silverado truck haven’t suggested an overwhelming performance advantage over Ford’s approach. Over in Europe, the EVs that Volkswagen has built on an expensive dedicated platform haven’t been the category killers the company hoped, and it is already planning a replacement platform.
With battery and related digital-vehicle technology evolving dramatically, each successive generation of EVs is likely to be a big step up from the last, for both consumers and manufacturer margins. Ford is already working on a second-generation Mustang Mach-E. In this chaotic environment, investors shouldn’t get too caught up in whether Ford or GM currently appears to have an edge. Both have huge assets and cash flows that position them well to compete with Tesla for American EV buyers as the market expands.
“We’re at the very beginning of this journey,” Ford Chief Executive Jim Farley told analysts on a conference call Thursday. And the destination is a long way off.
Write to Stephen Wilmot at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
