Ford will report its second-quarter results on July 28 and its profit is set to exceed expectations due to lower costs and increasing prices for new and used vehicles.
While speaking at a Deutsche Bank conference, chief executive Jim Farley revealed that while the semiconductor shortage has led to lower vehicle inventories, it has also meant consumers are paying higher prices for new and used cars to the benefit of Ford Credit.
Ford also cited high interest in several of its new vehicles, including the Bronco that has more than 125,000 orders. In addition, it has more than 100,000 reservations for the F-150 Lightning that is due to launch next spring.
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Farley added that Ford will eventually increase its spending on electric vehicles beyond the $30 billion through 2025 that it announced last month. He also said that the company’s Argo AI self-driving division will require more funding moving forward, Reuters reports.
He also revealed that Ford was hit harder than some other car manufacturers in the chip shortage due to a fire at a Japanese plant of Renesas Electronics Corp that it sources some of its chips from. Moreover, he doesn’t expect chip availability to return to normal levels until next year.
Ford has previously said that the chip shortage would cost it $2.5 billion this year and halve production in the second quarter. Farley added that Ford’s net income for the second quarter will be significantly lower than a year ago when it made a $3.5 billion gain on its investment in Argo AI.
