Ford Motor’s CFO said Wednesday that the company isn’t yet seeing consumer demand for new vehicles drop off – but rising commodity costs have wiped out the profit it initially expected to make on its electric Mustang Mach-E.
Demand for new Fords and Lincolns continues to exceed supply, which is still constrained by an ongoing global shortage of semiconductor chips, Ford CFO John Lawler told analysts at a conference hosted by Deutsche Bank – even after the company raised vehicle prices to offset the effects of inflation.
For the most part, those price increases have preserved Ford’s profit margins, Lawler said. But the price increases weren’t enough to offset the impact of rising costs on the company’s electric Mustang Mach-E.
The model saw its costs increase by roughly $25,000, much of that due to sharply higher battery material costs. While the Mach-E was profitable when it was first launched in late 2020, that’s no longer true, he said.
Despite the upbeat report on demand, Lawler noted one emerging sign that consumers may be reaching their inflationary limits: Ford Credit, the company’s financing arm, has seen an uptick in “delinquencies,” or late payments.
Lawler said Ford is taking the possibility of a U.S. recession seriously and that the company has modeled several possible scenarios for a downturn.
Still, Ford and the broader auto industry are in a different position today than in past recessions, when the company typically held high inventories and increased discounts that eroded margins, Lawler said.