As the third-quarter earnings drumbeat continues, we learned more about the state of global supply chains, global consumer appetite for big-ticket items and the future of self-driving technology.

“So it’s taking that investment and putting it towards a business where we think we will have a sizable return in the near term relative to one that’s going to have a long arc,” said John Lawler, Ford’s chief financial officer, during Wednesday’s investor call. 

Jim Farley, Ford’s CEO, even went so far as to say “profitable, fully autonomous vehicles at scale are a long way off and we won’t necessarily have to create that technology for ourselves.” 

“We don’t expect a single ‘Aha!’ moment like we used to,” he said during a call with investors. “Advancing Level 2 hardware and software beyond what Blue Cruise can do today, and ultimately enabling our customers to travel in very large ODDs or operating domains with their eyes off the road will give them back the single most valuable commodity in our modern lives. Time.”

Letting go of the Argo AI investment, however, had a material impact on the company’s profitability in the quarter. To unwind the trade, Ford had to endure a $2.7 billion “non-cash, pretax impairment” on its Argo stake. That pushed the company’s GAAP results into negative territory for the three-month period.

Taking a huge pre-tax loss is notable, as is the shift to focus on lower-level driver-assist technologies. 

The company had some good news to report, however, apart from its top-and-bottom line beats: profitability. Per the automotive company, Ford expects 2022 to bring in $11.5 billion in earnings before interest and taxes. Free cash flow projections for the year also ticked higher, with Ford anticipating $9.5 billion to $10.0 billion worth of the substance in 2022. (Ford’s EBIT in the third-quarter of $1.8 billion was above its own expectations.)

Ford’s view that it can forgo investments into pricey — and seemingly yet far-out — self-driving technology could mean a dearth of future deals from major car companies into smaller, tech-heavy autonomous companies. And the pullback in optimism could impact suppliers for those companies — the lidar concerns, and their ilk.

Correction: A quote from John Lawler was incorrectly attributed to Doug Field in a previous version of this article. 

Ford takes $2.7B hit on Argo shutdown, shifts its bet to driver assist tech by Rebecca Bellan originally published on TechCrunch

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