Ford (F) shares moved lower Thursday after CEO Jim Farley said he has 'no plans' to spin-off the carmaker's growing electric vehicle division.
Speaking to an investor even late Wednesday, Farley said that both the group's EV and legacy combustion-engine (ICE) divisions are underperforming in terms of earnings generation, adding that "we know our competition is Nio (NIO) and Tesla (TSLA), and we have to beat them, not match them ... and we also have to beat the best of the ICE players."
Bloomberg News reported last week that Farley is considering ways to separate the division, which is targeted with billions of investment over the coming years, from its ICE business.
"We have too many people, we have too much investment, we have too much complexity and we don't have expertise in transitioning our assets," Farley said. "(But) we have no plans to spin off our electric business or our ICE business."
Ford shares were marked 3% lower in early Thursday trading to change hands at $16.46 each, a move that would extend the stock's decline from its late January high to around 35%.
Ford plans to double its current EV output by 2023, and sees earnings growth this year of between 15% and 20%, but weaker-than-expected fourth quarter profits, as well as ongoing supply-chain and production disruptions, have test investor patience for its ambitions to challenge Tesla's TSLA electric car dominance.
CFO John Lawler told investors on a conference call late last month, however, that "supply constraints to remain fluid throughout the year, reflecting a variety of factors, including semiconductors and Covid", adding that the carmaker expects commodity headwinds of around $1.5 billion, as well as "other inflationary pressures, which will impact a broad range of costs."
Jefferies analyst Philippe Houchois, who cut his rating on Ford to 'hold", from 'buy' last month, cautioned that EV progress for OEMs such as Ford and GM, as well as their earnings potential, "remain mostly driven by cyclical shortages, returns remain within historical norms and the EV transition is largely a zero-sum-game initially."
