GM and Ford CEOs’ Electric Vehicle Push Hits a Roadblock Amid UAW Strike

Ford's EV unit lost $1.33 billion in the third quarter.

General Motors CEO Mary Barra.
General Motors stock is down 25 percent under CEO Mary Barra. Bill Pugliano/Getty Images

Detroit’s auto giants are eager to catch up in the game of electric vehicles, and leading the efforts are General Motors CEO Mary Barra and Ford CEO Jim Farley. Both companies had ambitious goals to produce and sell millions of EVs over the next few years, but as demand and prices drop, coupled with the impact of an unprecedented union strike, their CEOs are slowing down their EV push, leading some investors to question the effectiveness of their leadership.

GM and Ford reported third-quarter earnings this week, and both companies saw their stock prices fall sharply in reaction to the results. In fact, GM and Ford stock have been suffering for a while. Following GM’s earnings release on Oct. 24, investors were quick to note that GM stock has fallen 25 percent in the past nine years under Barra’s leadership. Farley’s tenure is much shorter—he was appointed Ford CEO in October 2020—and Ford’s share price has largely recovered from the early pandemic selloff. But over the past decade, the stock is down 40 percent.

Detroit’s EV push isn’t working as expected

On Ford’s earnings call yesterday (Oct. 26), CFO John Lawler said the company will delay about $12 billion in planned investments in EV as it finds it difficult to make money from EVs given an intense price war.

“EVs are still in high demand. It’s just…the pricing is much lower, and there’s a lot of overcapacity in the middle of the market,” Farley told analysts on yesterday’s call.

Ford’s delayed investments will include the construction of a battery plant in Kentucky. But the Blue Oval City, Ford’s new EV manufacturing campus under development in Tennessee, will continue as planned, Lawler said.

Ford reported $41.2 billion in revenue and $1.2 billion in net income for the quarter ended September. Revenue jumped 11 percent from the same period last year, and net income was a turnaround from last year’s loss, but both numbers missed analyst expectations.

Ford’s internal combustion engine and hybrid business, called Ford Blue, and its commercial vehicle unit, Ford Pro, were profitable in the past quarter. But its EV unit, Model E, recorded a $1.33 billion loss, despite a 26 percent increase in revenue from a year ago.

Farley told analysts while Ford’s EV strategy focuses on electrifying its most popular models, like the F-150 pickup truck, the company will keep making gas and hybrid versions of those vehicles to retain their loyal customer base in case the EV experiment doesn’t work out.

“Our EV strategy and our ICE strategy is to go after customers we know really well,” Farley said. He added that the profitability of EVs will improve as Ford applies its early experience to making its next generation of EVs.

“The customer is going to decide what the volumes are. Ford is able to balance production of gas, hybrid and electric vehicles to match the speed of EV adoption in a way that others can’t,” said CFO Lawler.

Earlier this week, GM posted better-than-expected results for the third quarter, but the company is abandoning its previously announced goal to build 400,000 EVs from 2022 through mid-2024. CEO Barra said GM will focus on matching production to demand to avoid deep discounts of its EVs.

“We are also moderating the acceleration of EV production in North America to protect our pricing, adjust to slower near-term growth in demand, and implement engineering efficiency and other improvements that will make our vehicles less expensive to produce, and more profitable,” Barra said in her Q3 letter to shareholders.

However, GM CFO Paul Jacobson said the company is still committed to making 1 million EVs by the end of 2025.

GM is delaying the launch of several mass-market EV models, including the Chevrolet Equinox EV, Chevrolet Silverado EV RST and GMC Sierra EV. Barra said these models will come to the market a few months later than expected.

The UAW strike has cost Ford and GM billions

On the earnings calls, GM and Ford executives also gave a glimpse of the financial impact of the now six-week-long strike of the United Auto Workers (UAW) against Detroit’s “Big Three” carmakers: Ford, General Motors and Chrysler owner Stellantis.

The UAW strike that began on Sept. 15 has cost Ford $1.3 billion and GM $800 million to date, the two companies said. Both carmakers withdrew their previously set revenue guidance for the current quarter as union talks continue.

On Oct. 25, a day before Ford’s earnings release, the union reached a tentative deal with Ford. It has yet to reach a deal with GM and Stellantis.

Ford employs 57,000 UAW workers, GM employs 46,000 and Stellantis employs 43,000, according to the Associated Press.

GM and Ford CEOs’ Electric Vehicle Push Hits a Roadblock Amid UAW Strike