Ford Motor Co. and Tesla Inc. scheduled their third-quarter earnings reports around the same time on Wednesday. In some ways, the companies provided a contrast in style and circumstance.
But they shared something — the need to reassure outsiders.
Ford, at age 115, embodies the Detroit automotive establishment. Tesla, the electric-car maker, is supposed to be the next big thing. Each has struggles.
Ford is profitable but its financial health is slipping. The automaker posted a quarterly profit of $991 million, a 37% decline from the same period in 2017. Its nine-month results aren’t much better, a 27% slide to $3.79 billion. The company has a robust North American business, primarily because of its F-Series pickups. Elsewhere? It’s having issues.
Tesla had a rare quarterly profit of $312 million. The company shipped 56,065 Model 3 electric cars to buyers. That model is supposed to be Tesla’s path to sustained profitability. But it has yet to show it can make cars efficiently and consistently.
Boost for Musk
Still, the profit was a bright spot for CEO Elon Musk. During August, he teased the idea of taking the company private, even saying the financing had been secured. It wasn’t. As a result, the focus for a long 17 days was on Musk’s unorthodox management style. The affair began when Musk unleashed a tweet in the middle of a trading day. Musk called the whole thing off very late on a Friday night.
In reporting the profit, Tesla sought to reassure everyone things were going to plan. The company reaffirmed it expects another profit in the current quarter.
“Sufficient Model 3 profitability was critical to make our business sustainable – something many argued would be impossible to achieve,” Tesla said in its earnings announcement.
Outside of Tesla, people are going to be watching whether Tesla profitability is, indeed, sustainable.
“A profitable quarter is a good start, though Tesla has made this start twice before without follow-up, or booking an annual profit,” Karl Brauer, executive publisher for Autotrader and Kelley Blue Book, said in a written statement. “If Model 3 production, and demand, are sustained over the next three quarters Tesla could enter sustainable financial status for the first time in its 15-year existence.”
‘Addressing Real Issues’
Ford, meanwhile, was also trying to reassure others it also has a handle on its problems.
“We are addressing real issues,” CEO Jim Hackett said on a conference call after the release of earnings. “We have to keep the foot on the throat of our performance.”
Earlier this year, Ford said it was getting rid of most of its car line up in favor of trucks SUVs and commercial models. Hackett said Wednesday that remains the smart play for the automaker. Traditional sedans, he said, “destroy value.” Hackett also said Ford’s North American operations are stronger because of actions taken last year.
Still, there’s a lot that isn’t known. The automaker plans an $11 billion restructuring. That move will result in an unknown number of salaried job cuts. Hackett, who took over as CEO last year, talks about making Ford more fit.
“We’re committed to sharing details as soon as we can,” Hackett said.
With both Ford and Tesla, there’s a lot left to be seen and evaluated.