This was partly due to a shortage in semiconductor chips, which reduced the availability of pickups and SUVs in North America. Also, Ford Motor's heavy investment in Rivian, an electric-vehicle startup, is partly responsible.
John Lawler, Chief Financial Officer, pointed out that these losses were not the only ones. He also stated that pretax profits of $2.3 billion were also earned by the company.
Lawler stated that "Clearly, the demand for our products is very strong." "We still have problems with chips supply, which constrained our business, especially here in North America. It hit usdisproportionately on large vehicles."
Semiconductors, also known as chips or microchips, are the brain of all modern electronic devices. Semiconductors control everything in vehicles, from the engine temperature to the alerts for an oil change.
According to the Semiconductor Industries Association, the major reason for the shortage of chips is the supply-chain problems caused by the pandemic. The rise in sales of electronic devices was due to people working remotely, accessing telemedicine visits from their homes and taking remote learning classes from their laptops. However, COVID-related absenteism caused disruptions in the supply chain at all points. According to the trade group, semiconductors dominated the nation's inventory.
Due to a chip shortage, Ford has had to close several North American factories including those that make popular full-size pickups. According to industry analysts, the shortage will result in fewer cars being produced by Ford and other major manufacturers this year.
Ford reported that it sold 966 000 vehicles in the first quarter of this year, a decrease of 9% over the previous year.
Rivian falls short
Ford executives claimed Wednesday's losses were also due to the declining value of Rivian, an electric-vehicle startup. According to Daniel Ives (equity analyst at Wedbush Securities), the startup has not fulfilled its potential. He noted that Rivian, a California-based company, missed its first quarter earnings projections due to a price rise debacle.
Rivian had announced price increases on March vehicles, but then reversed the decision two days later after customers protested and began cancelling orders.
Ives stated in a research note that "the Rivian story was disappointing to Wall Street so far." Rivian could still be a major EV manufacturer one day. "But, they need to start delivering models customers and stop making excuses," Ives stated.
Lawler stated that Ford was also subject to inflationary pressures from suppliers but was able recover with higher vehicle prices. If inflation continues to rise, the CEO stated that he could not rule out additional pricing.
Ford's $3.1 billion loss in its first quarter compares to a profit last year of $3.2 billion. The revenue fell 9% to $34.4 billion, compared to a year earlier.