Ford Motor Company reported on Wednesday that its second-quarter adjusted earnings declined as the automaker continues to grapple with costly quality issues and pressures in its electric vehicle business, leading to an 11% drop in its stock price in after-hours trading.
According to LSEG data, the Detroit automaker's adjusted earnings per share were 47 cents, significantly lower than the analysts' expectation of 68 cents.
Ford executives emphasized that the company is continuing to eliminate structural inefficiencies and transform its fuel engine and electric vehicle businesses, but Wall Street remains unconvinced.
Morgan Stanley analyst Adam Jonas told Ford CEO Jim Farley during the company’s conference call, "You say Ford is not the same company it was three years ago, but the stock market seems to completely disagree with you."
Since taking office in October 2020, Farley has made addressing the company's quality issues a priority. Since then, Ford has hired a new Chief Quality Officer and improved some production practices to avoid errors, but it still leads the industry in the number of recalls.
Ford's Chief Financial Officer John Lawler told reporters that second-quarter warranty costs increased by $800 million compared to the previous quarter. Lawler stated that most of the warranty costs were related to older models launched in 2021 or earlier. He said that in-quarter field service actions were a one-time cost increase for older models, and Ford expects to meet its warranty cost expectations in the second half of the year.
