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When Tesla delivered a rare and unexpected profit on Wednesday, investors went wild. Even some of CEO Elon Musk's harshest critics sounded surprisingly bullish.
The California carmaker's stock surged by 9.1 percent the next day and another 5 percent Friday.
Ford also reported better-than expected earnings for the third quarter, sending the shares up 9.9 percent the next day. But the celebration was short lived. The shares fell slightly on Friday as the Detroit automaker's stock continues to languish below $10 a share, in territory it hasn't seen in years.
At $991 million, Ford's profit was more than three times that of Tesla's. The electric carmaker's earnings, however, told a very different story than Ford.
CEO Elon Musk finally appears to be delivering on expectations that Tesla can revolutionize the auto industry, or at least reliably turn a profit. With Ford, analysts and investors are yet to be sold on the $11 billion grand turnaround plan first promised by Jim Hackett when he was named Ford CEO in a broad management shake-up nearly 18 months ago. Its $991 million in profit fell 37 percent from the prior year.
Following the May 2017 ouster of Mark Fields, Hackett launched what was billed as an intense, 100-day deep-dive aimed at addressing Ford's problems. Yet, as 2018 rapidly comes to a close, the former CEO of furniture-maker Steelcase has offered relatively few, and often inscrutable, indications of what he has in mind, leaving not only outsiders, but insiders at all levels, trying to understand precisely what directions he wants them to move in.
"A lot of us are asking the same question," a senior Ford executive, who asked not to be identified, told CNBC. "I just have to work on rallying my troops and hope we're all moving in the same direction
Hackett himself left plenty of folks scratching their heads during an earnings conference call with analysts and reporters Wednesday. Asked about his strategy, the former University of Michigan football player said "it's not a restructuring plan it's a redesign plan. First we have to identify the areas that need to be fixed, then we have figure out how to fix them and then execute."
Under his guidance, Ford has made several critical moves. Hackett announced a shake-up of its struggling Chinese operations last week, appointing Anning Chen, an experienced auto executive, as the unit's new president and CEO. And Hackett's also formed several potentially far-reaching alliances. One with Mahindra Group, could help it crack into the promising Indian market. Another, with Volkswagen AG, ostensibly will focus on the lucrative commercial vehicle market.
The latter alliance has peaked interest across the auto industry, the always-active rumor mill questioning whether it could lead to a broader tie-up. Just don't expect a latter-day equivalent of the ill-fated Daimler Chrysler "merger of equals," or even something on the order of the Renault-Nissan-Mitsubishi Alliance, Ford chief spokesman Mark Truby told CNBC. "We are not considering any equity swap or cross-ownership."
For those truly familiar with the history of Ford, that should come as no surprise. There are few who truly believe the controlling Ford family, heirs of founder Henry, would willingly relinquish control. Indeed, insiders say that was a key reason the second-largest domestic automaker chose not to follow cross-town rivals General Motors and Chrysler into bankruptcy at the beginning of the decade, despite the potential of wiping out billions of dollars in debt.
Ultimately, all things Ford Motor Co. must win the approval of the Ford family and, for the moment, CEO Hackett appears to retain their confidence. But for how long is the question if he cannot deliver on expectations of a turnaround.
To pull it off, the 63 year-old executive has a handful of key issues he will need to address but, to a large degree, one-time Ford President Lee Iacocca might have summed it up best when he long ago explained that, "There are just three things that matter in the auto industry: product, product and product."
That's never been more obvious than in North America. Ford largely has it right on the truck side of its line-up. For more than three decades, the big F-Series pickup has been the best-selling product line in North America, and the automaker is a force to be reckoned with in the utility vehicle market, as well. But even here, there are unwelcome holes in the mix.
Ford was one of the many manufacturers who abandoned the midsize pickup segment after shutting down the Twin Cities plant in Minnesota that built its dated Ranger model in 2012. While General Motors and Honda rushed back into what turned out to be a resurgent market, Ford planners dithered like Hamlet and the company will only launch a new generation Ranger in January.
"We can't go back and change the past," Ford President of the Americas Joe Hinrichs said at an event last week marking the relaunch of Ranger production in the U.S. "But we think the market is big enough that there will be room for everybody."
The reborn Ranger will be joined in 2020 by the return of the Bronco, a once-popular Ford SUV that was discontinued in the late '90s. Both models will be assembled at the Wayne plant which was, until recently, producing both the compact Focus sedan and C-Max people-mover. With the exception of the classic Ford Mustang "pony car," those and the rest of the automaker's passenger car line-up are in the process of being phased out, perhaps the single boldest – and controversial – move authorized by Hackett.
There's no question that sedan sales have tumbled as millions of American buyers have shifted to sport-utility vehicles and crossovers. But key competitors, including GM, as well as import powerhouses Toyota, Nissan, Honda and Hyundai, are, if anything, redoubling their focus. And Stephanie Brinley, a principal analyst with IHS Markit, is skeptical of Ford's decision. "The sedan market isn't great, but it's still large and Ford simply didn't do what's necessary to compete" by letting once-strong models like the Focus and bigger Fusion go years without necessary updates, she said.
Even as Ford let its sedans grow old, Joe Phillippi, head of AutoTrends Consulting, contends the carmaker waited far too long to rebuild its once-powerful Lincoln brand. The luxury division will be tested over the next 12 months with the launch of two critical SUVs which will, notably, abandon the unloved and confusing alpha-based naming strategy adopted a decade ago. The new version of the MKT, for one, will now be called the Aviator.
Product problems also catch the blame for Ford's struggle in China, though it didn't help that the automaker waited for a number of years after key competitors GM and Volkswagen entered what has become the world's largest car market. When you're playing a game of catch-up, said Brinley, you better have the products that can make a difference.
Chinese new vehicle sales dipped 11.6 percent in September, the third consecutive monthly decline in a market used to strong, double-digit growth. Ford, however saw a 43 percent drop last month and was off 6 percent for all of last year.
Earlier this month, Ford announced plans to launch what it is billing as a new core model for China, the Territory SUV, with a total of 50 all-new or updated products in the works.
"We're in really good shape for the launch of these new products," Jim Farley, president of Ford's Global Markets said during the earnings call Wednesday. "We have tremendous opportunity to drive better margins in China. "Our turnaround in China is really up to us. It's about our new products and our costs. The opportunity is in our control," said Farley.
Whether his optimism proves valid is far from certain, especially in light of Ford's ongoing promises to fix its China problem.
And it has plenty of issues in other key markets, including Latin America and Europe. The Dearborn-based maker insists it won't walk away from its endlessly troubled European operations, unlike GM which last year completed the sale of its Opel subsidiary to France's PSA Group. Some observers question whether Ford may try to partner with VW in both Latin America and Europe in hopes of stemming its losses.
Following Hackett's appointment last year, many observers questioned whether he would remain as committed to Ford's so-called "new mobility" program as his predecessor Fields. Considering Hackett was a key strategist behind the company's autonomous driving efforts, it should be no surprise that he has, if anything, redoubled that commitment.
Over the summer, Ford announced plans to build a massive complex for its electrified, connected and self-driving vehicle efforts in Detroit's Corktown neighborhood, with its headquarters in the long-abandoned Michigan Central train station.
The question is when those efforts will actually pay off, many investors complain. Unlike GM, which has a clear path to revenue through its Maven ride-sharing service, Hackett and his team have yet to lay out a clear strategy for going beyond the R&D stage with its autonomous driving investment.
Brinley said that speaks to Ford's most basic problem. The company simply hasn't offered a clear and coherent sense of its strategy is and "because of that, it's only causing confusion," both inside and outside the company.