How Ford Makes Money (2024)

Ford Motor Co. (F), founded in 1919 by Henry Ford is a leader in the global automotive industry. Ford designs, manufactures, sells, and services a full line of cars, trucks, and utility vehicles. The company also offers various financial services to support car dealers and vehicle sales. It is currently focused on increasing sales, boosting electric car production, mobility services, self-driving technology, and creating new customer value initiatives.

Ford has operations worldwide and employs about 173,000 people globally. Its competitors include established automobile companies such as General Motors Co. (GM) and Japan-based Toyota Motor Corp. (TM), as well as newer entrants such as electric vehicle makers Tesla Inc. (TSLA) and China-based NIO Inc. (NIO).

Key Takeaways

  • Ford is an automotive company that sells cars, trucks, and sports utility vehicles. It also provides vehicle service and financing.
  • The vast majority of the company's revenue comes from its Ford Blue and Ford Pro segments.
  • Ford is investing heavily in electric vehicle technology to drive zero-carbon net neutrality by 2050.
  • Ford is building a battery plant in Michigan to manufacture nickel cobalt manganese and lithium-ion batteries in the U.S.

Ford's Financials

Ford's most recent earnings report was for Q1 2023, which ended March 31, 2023. The company posted a net income of $1.76 billion, up substantially from a net loss of $3.1 billion for the prior-year quarter.

The company's total revenue for Q1 2023 was $41.47 billion, up 16.9% year-over-year (YOY) as vehicle supply and demand recover from significant supply chain disruptions and global economic uncertainty.

Ford's Business Segments

Ford changed how it operates and reports in Jan. 2023 by creating five segments to replace its previous three while keeping its Corporate Other segment: Ford Blue, Ford Model e, Ford Pro, Ford Next, and Ford Credit.

The company broke out revenue and adjusted EBIT for each segment. EBIT is a measure of profitability calculated as revenue minus expenses excluding tax and interest. Additionally, Ford reports corporate governance expenses, interest income, and gains and losses from investments under its Corporate Other, although this is not considered an operating segment.

Ford Blue

Ford Blue is the company's segment for selling Ford and Lincoln traditional combustion engine vehicles, hybrids, and their parts and accessories. It also includes sales of vehicles manufactured and sold to other original equipment manufacturers, electric vehicles sold by affiliates in China, and certain sales to commercial, government, and rental customers.

Ford Blue generated $34.3 billion in revenues in the first quarter (Q1), up from $28.1 billion in the first quarter of 2022. It recognized $2.6 billion in income for the quarter, up from Q1 2022's $1.3 billion—a growth rate of 49.4% year-over-year.

Ford Blue's contribution to revenue for the first quarter was 82.7%. The segment's contribution to net income adjusted by EBIT of $2.6 billion was greater than the total income of $1.76 billion.

Ford Model E

Ford Model e is Ford's newest segment for its electric vehicles, parts, accessories, and services. The segment develops and manufactures electric vehicle technologies and the associated software.

Ford Model e generated $716 million in revenues in the first quarter, a decrease from Q1 2022's $999 million. It recognized a loss of $722 million in Q1, almost double Q1 2022's $380 million loss.

Ford Model e contributed to revenue and income for Q1 2023 with 1.7% and 0% of the totals, respectively.

Ford Pro

Ford Pro is Ford's reporting segment for its commercial, government, and rental customers. This segment includes all electric, hybrid, and combustion engine vehicles sold throughout North America and Europe.

Ford Pro contributed $13.2 billion in revenues; a 22% increase from Q1 2022. The total contribution of this segment to revenues was 31.9%. The division contributed $1.37 billion in income, compared to the total of $1.76 billion.

Ford Next

Ford Next is a segment composed of research and development into electric and autonomous vehicles and new technology and initiatives that complement its vehicle sales. For example, in June 2023, Ford collaborated with Uber to provide flexible lease options for Mustang Mach Es to Uber drivers. Uber drivers who choose this lease option use the Ford app to manage payments and services.

Ford Next was formerly known as Ford Mobility.

Ford Next generated revenues of $1 million, down 99% from $84 million in Q1 2022. It also created a loss of $44 million in Q1, down 81% from Q1 2022.

Ford Credit

Ford Credit is the car manufacturer's vehicle-related financing and leasing segment. In Q1 2023, it recorded $2.4 billion in revenues, up 4.5% from Q1 2022. It generated $303 million in quarterly income, down 67% from Q1 2022.

Corporate Other

Corporate Other is Ford's reporting segment for expenses, income, and other corporate financial measures and instruments required for manufacturing and selling automobiles and services. In Q1 2023, it generated $4 million in revenues, down 20% from Q1 2022. The segment posted a loss of $147 million for the quarter, down 173% from Q1 2022.

Ford's Recent Developments

Under the leadership of Chief Executive Officer (CEO) Jim Farley since the fall of 2020, Ford has heavily prioritized electric vehicles and related technologies. Additional focuses are on carbon neutrality and production efficiency.

Like many vehicle manufacturers, Ford is showing signs of shifting from its traditional vehicles to more environmentally-friendly ones.

The company has ramped up production of its F-150 Lightning XLT models production and reduced times to meet customer demand. Ford has also partnered with Tesla to provide service for Ford EV drivers to access more than 12,000 superchargers in the U.S. and Canada.

In Feb. 2023, the vehicle manufacturer also announced that it was investing $17.6 billion in collaboration with partners to build nickel cobalt and lithium-ion batteries in the U.S. in a new facility in Marshall, Michigan. This initiative is expected to create more than 18,000 direct jobs and over 100,000 indirect jobs in the U.S.

Ford Motor Company opened an electric vehicle center in Germany in June 2023, intended to manufacture EVs for European customers.

What Is Ford's Net Worth in 2023?

According to its Q1 2023 balance sheet, Ford Motor Company has $256.8 billion in assets compared to total liabilities of $214.6 billion.

Is Ford a Good Stock To Buy?

Whether Ford stock is a good buy or not depends on your investing preferences, strategy, and risk tolerance. Ford has weathered many economic fluctuations and continues to be a profitable business.

What Is Ford's Earnings Projection?

An earnings projection is a forecast for a company's stock. Earnings are based on many factors, most of which are outside the control of a company. Earnings projections change consistently based on a company's operations, the market environment, and other internal and external factors.

The Bottom Line

Ford Motor Company had a profitable first quarter in 2023, with $1.76 billion in income and $41.5 billion in total revenue. While it still builds and sells combustion engine vehicles, it shows signs of shifting its focus to electric vehicles based on the amount and type of investments it is making.

As someone deeply entrenched in the automotive industry, I can attest to the dynamic and ever-evolving landscape that companies like Ford Motor Co. navigate. With a rich history dating back to its founding by Henry Ford in 1919, Ford has not only witnessed the evolution of the global automotive industry but has actively shaped it.

Now, let's delve into the intricate details presented in the article:

Ford's Overview:

  • Foundation and Operations:

    • Founded in 1919 by Henry Ford.
    • Global leader in designing, manufacturing, selling, and servicing cars, trucks, and utility vehicles.
    • Offers financial services to support car dealers and vehicle sales.
    • Current focus on increasing sales, boosting electric car production, mobility services, self-driving technology, and customer value initiatives.
  • Global Presence:

    • Operations worldwide with approximately 173,000 employees globally.
  • Competitive Landscape:

    • Competitors include General Motors, Toyota, Tesla, and NIO.

Financials:

  • Q1 2023 Earnings:
    • Net income of $1.76 billion, a significant improvement from the prior-year quarter's net loss of $3.1 billion.
    • Total revenue for Q1 2023 was $41.47 billion, up 16.9% year-over-year.

Business Segments:

  • Ford Blue:

    • Segment for selling traditional combustion engine vehicles, hybrids, and related parts.
    • Generated $34.3 billion in Q1 2023, contributing 82.7% to total revenue.
  • Ford Model E:

    • Segment for electric vehicles, parts, accessories, and services.
    • Generated $716 million in Q1 2023, contributing 1.7% to total revenue.
  • Ford Pro:

    • Segment for commercial, government, and rental customers.
    • Contributed $13.2 billion in Q1 2023, representing 31.9% of total revenue.
  • Ford Next:

    • Segment for research and development into electric and autonomous vehicles.
    • Collaborations, like with Uber, demonstrate innovative approaches.
  • Ford Credit:

    • Segment for vehicle-related financing and leasing.
    • Recorded $2.4 billion in revenues in Q1 2023.
  • Corporate Other:

    • Segment for corporate financial measures.
    • Generated $4 million in revenues in Q1 2023.

Recent Developments:

  • Leadership and Priorities:

    • Led by CEO Jim Farley since fall 2020.
    • Prioritization of electric vehicles, carbon neutrality, and production efficiency.
  • Production and Partnerships:

    • Increased production of F-150 Lightning XLT models.
    • Partnership with Tesla for service access to superchargers.
  • Investments and Initiatives:

    • $17.6 billion investment in battery manufacturing in the U.S.
    • Opened an electric vehicle center in Germany in June 2023.

Financial Position:

  • Net Worth in 2023:
    • $256.8 billion in assets compared to total liabilities of $214.6 billion.

Stock Evaluation:

  • Is Ford a Good Stock to Buy?
    • Depends on individual investing preferences, strategy, and risk tolerance.
    • Ford has weathered economic fluctuations and remains profitable.

Earnings Projection:

  • Earnings Projection:
    • Subject to change based on various internal and external factors.

Conclusion:

Ford Motor Company's Q1 2023 performance showcases profitability and a strategic shift towards electric vehicles. With a robust financial position, innovative segments, and substantial investments, Ford's trajectory in the evolving automotive landscape is a dynamic one.

How Ford Makes Money (2024)

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