Ford sharpening sales pitch as driverless car wager underwhelms

Ford has work to do convincing investors that its bet on self-driving cars and robo-taxis will pay off for shareholders now enduring a profit drop to go along with a stock-price slump.

First-quarter adjusted earnings fell by 42 per cent, dragged down by wagers on battery-powered and autonomous autos. Chief executive officer Mark Fields acknowledged to analysts that Ford needs to do a better job explaining the opportunity for revenue and profit growth ahead.

Fields has struggled to generate enthusiasm for plans to pour billions into new technologies and take on upstarts such as Uber Technologies and Waymo, Alphabet Inc.’s self-driving spinoff. The CEO has said earnings will rebound next year as new models including the redesigned Lincoln Navigator are expected to start paying off. Until then, earnings will continue to be pinched in a U.S. market that’s also seeing auto demand roll back following a seven-year growth spurt.

“This will be the toughest quarter,” chief financial officer Bob Shanks told reporters at Ford’s headquarters in Dearborn, Mich. “The balance of the year, in the aggregate, will be flat to better.”

Profit excluding some items was 39 cents a share during the first three months of the year, beating the 34-cent average estimate of analysts surveyed by Bloomberg as well as the company’s own projection given in March. Net income on that basis fell to $2.22 billion.

The cool reception so far to Ford’s plan to plow into autonomous driving and electrification stands in stark contrast with Tesla Inc. The company led by Elon Musk has posted only two quarterly profits in its history, yet its market value surpassed Ford’s this month.

“Tesla is just all about the longterm potential of the company,” David Whiston, an analyst with Morningstar Inc. said by phone ahead of Ford’s earnings release. “People are willing to pay quite a bit for that over established profits and cash flow from Ford.”

Ford may still have little choice but to take the hit now to prepare for a future where companies such as Tesla, Apple and Waymo are aiming to dominate an autonomous age.

“If Ford doesn’t do it, Silicon Valley will,” said Whiston. “If you don’t invest now to make sure you’re competitive in the next decade, you risk becoming obsolete.”