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Ford earnings: What to expect

Yahoo Finance’s Pras Subramanian joins the Live show to break down the expectations for Ford’s earnings and EV pricing.

Video transcript


- All right, Ford's set to report earnings today after the bell with investors watching that company's fundamentals as it stays locked in in that EV price war. Joining us with more is "Yahoo Finance's" Pras Subramanian. A lot of people wondering about that race to the bottom with prices.

PRAS SUBRAMANIAN: Yeah, Rochelle. Big-big race to the bottom on those prices. Definitely, for sure. But mostly what investors will be watching. I think two key parts will be sort of forward guidance there for their EBITDA, or earnings before income taxes. Or interest in taxes. Sorry. So, basically, they had guidance of $11.5 billion for 2022. Are they going to hit that guidance?

And also for 2023, what will it be? Investors looking for on $10 billion estimated EBITDA guidance there for 2023. But also margins, right, Rochelle? Like you said, the race to the bottom pricing. Ford will probably report around 7% margins. That's what people are looking for 2022.

Is that going to come down after they've sort of cut prices on models like the Mach-E just this past week? Are we going to see pressure there as customers are trying to tighten the purse strings? John Lawler, CFO of Ford, said last quarter that he saw customers trading down to lower trim levels to afford the cars that they want. And then also, they're actually taking out longer loan term payments, like 72-month term payments, to get cheaper payments for their loans.

So we're going to see a lot of that too. And are we going to see incentives coming from Ford to kind of lower some of these high truck margins for these very popular truck that they offer? Are we going to see those prices come down because of the incentives? So that's probably what we're going to see and hear for on the call and also in the earnings statement.

- And Pras, of course, other automakers are shedding jobs. Is this a course correction or a sign of deeper worries in the auto industry?

PRAS SUBRAMANIAN: I think it depends. It's a case-by-case basis. GM last night said-- or two days ago, said that they were not going to cut any jobs. They're going to do some around $2 billion in cost savings through other types of measures. But then we saw Rivian cut again 6% of staff non-manufactaring staff in order to sort of boost their cash reserves and really plow that money into production and distribution.

So it's really coming down to what companies say. Ford also had already mentioned that they're going to cut some white collar jobs. So we already know that's coming. The question is will we hear more about that? I'm not sure yet. But I think they're sort of setting themselves up with a two-pronged attack with their Ford Model e-Business, which covers the EVs and the regular Ford Blue Oval, which is going to cover their gas-powered cars. So they're already splitting the business up, and they're also sort of focusing on high growth areas in their legacy business to fund those high growth areas.

- It will be fascinating to hear more about that. Pras Subramanian, thank you so much for that update.