Ford reports losses, makes sharp turn away from automated driving

Ford Motor Co on Wednesday reported a net loss for the third quarter, driven by its decision to shift spending from its Argo AI autonomous driving business.

Ford's move contrasts sharply with rival General Motors Co's (NYSE:GM) decision to double investment in its Cruise robot taxi unit, highlighting the pressure on automakers to make tough choices as the financial demands of the shift to electric vehicles continue to mount. Both US automakers continue to take heavy losses on automated vehicle development. Ford posted a net loss of $827 million in the quarter after taking a $2.7 billion non-cash pretax impairment of its investment in Argo AI. Ford shares fell 1.6% in after-hours trading. The automaker said Argo will be "liquidated" and "talented engineers" will be offered positions at Ford. Pittsburgh-based Argo's other major investor, Volkswagen AG (OTC:VWAGY), also said it expects to hire some staff from Argo. In a statement on Wednesday, Argo said it "will not continue its mission as a company," a decision made "in coordination with our shareholders." Some Argo employees will be laid off, it said. Ford and VW each own about 39% of Argo, while Lyft Inc (NASDAQ:LYFT) owns about 2% and Argo's founders and employees own the rest. Ford will shift its development focus from fully self-driving systems developed by Argo to advanced driver assistance systems (ADAS) built in-house, Chief Executive Jim Farley said Wednesday. Such systems are partially automated, but still require humans to be engaged while a vehicle is in motion. "Profitable, fully autonomous vehicles are a long way off and we won't have to create this technology ourselves," Farley said in a statement. The US automaker said third-quarter revenue rose 10% from a year ago to $39.4 billion. Adjusted operating profit fell to $1.8 billion from $3.0 billion last year, but beat analysts' consensus estimate of $1.7 billion. Adjusted operating profit of 30 cents a share beat analysts' estimate of 27 cents. Ford had warned in mid-September that inflation-linked supplier costs were about $1 billion higher than expected. GM on Tuesday reported a net profit of $3.3 billion on record third-quarter revenue of $41.9 billion. GM affirmed its full-year net income guidance of between $9.6 billion and $11.2 billion. GM executives were generally upbeat on the company's earnings call, while Ford was more cautious. Ford Chief Financial Officer John Lawler said in a briefing on Wednesday: "We see the possibility of a mild (or) moderate recession in the US next year. We could potentially have a more significant downturn in Europe." Ford said it expects full-year adjusted earnings before interest and taxes to rise to about $11.5 billion, up about 15% from a year ago, but at the lower end of its previous guidance of $11.5 billion to $12.5 billion. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!