DETROIT — Ford Motor Co. on Wednesday posted a third-quarter loss of $827 million that it largely blames on newly revealed plans to shut down Argo AI, a self-driving vehicle development company the automaker had invested in heavily.
CEO Jim Farley said the company now believes mass deployment of fully self-driving vehicles is “a long way off,” while CFO John Lawler added it could be “five-plus years away.”
Ford’s adjusted earnings before interest and taxes fell 40 percent from the same period a year ago, to $1.8 billion. That’s slightly higher than the $1.4 billion to $1.7 billion range it projected last month along with a warning that inflation had significantly increased supplier costs.
The automaker’s adjusted profit margin fell by almost half, to 4.6 percent, while revenue rose 10 percent, to $39.4 billion.
Lawler told journalists that Ford’s Q3 results “could have been better” but that the automaker was encouraged by its $3.8 billion operating cash flow. It now expects full-year adjusted earnings to come in at about $11.5 billion, at the low-end of the $11.5 billion to $12.5 billion guidance it had previously given.
Lawler said that’s partly attributable to the fact that many of Ford’s non-semiconductor suppliers are unable to ramp production as quickly as it needs due to labor shortages and other factors.
Ford earned $1.3 billion during the quarter in North America and posted 5 percent EBIT margins, a decrease from this time a year ago due to higher costs and a lack of available parts. At the end of September, Ford said it had 40,000 vehicles partially-built and awaiting parts, although it hopes to work through all of those by the end of the year.
Ford made $256 million in Europe in the quarter, $147 million in South America and $104 million in its International Markets Group. The automaker lost $154 million in China.
Ford said its third-quarter results were marred by Argo AI’s inability to attract new investors — resulting in a $2.7 billion non-cash, pretax impairment on its previous investments in the company. As Argo winds down, Ford now plans to halt spending on Level 4 advanced driver-assist systems to focus on lower-level advanced systems that can be deployed sooner.
Ford originally had planned to begin commercializing Level 4 vehicles in 2021 before pushing back that timeline due to the coronavirus pandemic.
“But things have changed, and there’s a huge opportunity right now for Ford to give time — the most valuable commodity in modern life — back to millions of customers while they’re in their vehicles,” Farley said in a statement. “We’re optimistic about a future for L4 ADAS, but profitable, fully autonomous vehicles at scale are a long way off and we won’t necessarily have to create that technology ourselves.”
When Ford does eventually develop Level 4 technology, Lawler said it would likely be focused on commercial services like package delivery which it had been testing in various cities with Argo.
Farley said Ford plans to hire “a couple hundred” employees from Argo AI to expand and accelerate development of technology categorized as Level 2+ and Level 3 because they rely on more driver interaction.
Doug Field, Ford’s chief advanced product development and technology officer, said developing fully autonomous vehicles is the most difficult current challenge facing the industry.
“It’s harder than putting a man on the moon,” he said.
