Ford Motor Co., rapidly retooling its electric vehicle strategy in a decelerating market for plug-ins, posted first-quarter results that beat expectations on strong sales of work trucks.

The automaker Wednesday reported adjusted earnings per share of 49 cents, topping the 42 cents analysts expected on average. First quarter revenue of US$42.8 billion surpassed the $40 billion analysts expected.

“We had a really solid quarter,” John Lawler, Ford’s chief financial officer, said in a Bloomberg TV interview. “It looks like we’re on track for a really solid year.”

Ford’s results were driven by a 36 per cent increase in revenue in its commercial Ford Pro unit, which saw strong sales of the recently redesigned Super Duty pickup truck. Ford Pro, the company’s most profitable division, posted a 16.7 per cent profit margin before interest and taxes.

At the same time, the company’s cash flow suffered from a buildup of more than 60,000 of the newly redesigned F-150 pickup truck for extra quality checks. First-quarter adjusted free cash flow was a use of $500 million. 

Ford reiterated its earnings forecast for the year of $10 billion to $12 billion before interest and taxes, and said it is trending toward the high end of that range. The company also raised its free cash flow forecast to between $6.5 billion to $7.5 billion.

Ford’s shares rose 1.6 per cent as of 4:35 p.m. after regular trading in New York. The stock had gained about 6 per cent this year through Wednesday’s close.

EV Slowdown

As EV sales growth has stalled, Chief Executive Officer Jim Farley has dialed back an aggressive electrification push to make more SUVs and pickups that generate the profits needed to fund future growth. 

The CEO has delayed two battery-powered models and slashed EV prices and production while ramping up output of gas-fueled models like the Bronco sport-utility vehicle as well as gas-electric hybrids such as the Maverick tiny truck. The automaker is also pivoting to produce smaller, more-affordable EVs due to arrive in late 2026, Bloomberg has reported.

In the meantime, Ford is deeply discounting its current crop of EVs as inventory balloons of its F-150 Lightning plug-in pickup and Mustang Mach-E battery powered crossover SUV.

Farley is cutting $2 billion in costs to help offset the up to $5.5 billion in losses it expects in its EV business this year. That includes a renewed push to improve quality in order to lower billions in warranty costs that helped to make Ford the most-recalled automaker in the U.S. for the last three years.

EV losses and struggles controlling costs have overshadowed strength in the company’s commercial division, Ford Pro, and its profitable business in selling traditional internal combustion-engine vehicles, Ford Blue. The company’s shares have trailed rivals General Motors Co. and Chrysler-parent Stellantis NV.

“The overhang on the stock comes down to one word: when?” David Whiston, auto analyst with Chicago-based Morningstar Inc., said in an interview. “When does it all turn around? When do we start seeing traction from the cost cutting? When do we get more scale on EVs, which are now being delayed?”

Pro Profits

Ford’s EV unit, known as Model e, lost $1.32 billion before interest and taxes in the first quarter, better than the $1.36 billion deficit analysts expected on that basis. Ford’s U.S. EV sales rose 86 per cent in the first quarter, but that was compared to a year-ago period when two of its EV plants were shut down. Compared to the fourth quarter of 2023, Ford’s EV sales fell 22 per cent in the first three months of this year.

“The Model e unit is expected to lose about $33,000 per unit in 2024, about 17 per cent higher than 2023,” Joel Levington, director of credit research for Bloomberg Intelligence, wrote in an April 22 note. “Reductions in investments, sales and possibly cost cuts could create a ‘less worse’ scenario.” 

The carmaker’s commercial Ford Pro business earned $3 billion before interest and taxes, far more than the $2.24 billion analysts expected on average. The automaker is having greater success selling EVs to fleet buyers, who find they save money thanks to lower fuel and maintenance costs.

In Ford Blue, its traditional business that includes internal combustion engine vehicles and gas-electric hybrids, the automaker earned $905 million before interest and taxes, worse than the $1.63 billion analysts expected. Ford’s total U.S. light vehicle sales rose 7 per cent in the first quarter on strong demand for hybrids, which surged 42 per cent.

Sales of F-Series trucks, Ford’s best seller, fell 10 per cent in the first quarter amid the quality checks. This month, Ford resumed shipping the electric F-150 Lightning after nearly three months of holding the model to fix an undisclosed quality issue.