Ford is working on a number of high-profile vehicles including a new Bronco, a Mustang-inspired electric crossover and a redesigned version of the most popular pickup truck in America.
While that would normally be good news, investors see a much bleaker future. In particular, the Moody’s Investors Service now has a negative outlook for the company and has downgraded Ford’s credit rating to speculative or “junk” status.
As Business Insider reported, Moody’s expects the automaker to post “weak earnings and poor cash generation” for the foreseeable future. This comes at a bad time for Ford as they’re embarking on a major restructuring which is expected to cost around $11 (£8.9 / €9.9) billion.
In a note, Moody’s said “Ford is undertaking this restructuring from a weak position as measures of cash flow and profit margins are below our expectations, and below the performance of investment-grade rated auto peers.” The service went on to say they don’t believe things will changes in the next couple of years as they expect a “lengthy period of negative cash flow from the restructuring programs.”
If the restructuring issues weren’t bad enough, Moody’s noted that demand for new vehicles is softening and the automotive industry is experiencing an “unprecedented pace of change relating to vehicle electrification, autonomous driving, ride sharing and increasingly burdensome emission regulations.” This will significantly increase costs for automakers as they will need to develop electrified vehicles, autonomous driving technology and more fuel-efficient engines.
Those are significant challenges, but Ford has been tackling them head on. Besides developing electric vehicles in-house, the automaker has partnered with both Rivian and Volkswagen. On the autonomous front, Ford is Argo AI’s biggest cheerleader and recently got Volkswagen to invest $2.6 (£2.1 / €2.3) billion into the firm.