Ford Motor said on Wednesday that the global shortage of computer chips will take a greater toll on its business than previously expected and would likely cut its vehicle production in the second quarter by about half.
“The effects of the shortage have grown,” Ford’s chief financial officer, John Lawler, said during a conference call with reporters. “We now expect the semiconductor shortage to get worse and bottom out in the second quarter but continue to put pressure on our operating results in the second half of the year.”
Ford expects the shortage to lower its operating profit this year by $2.5 billion, to between $5.5 billion to $6.5 billion. It had previously said the impact of the shortage would be between $1 billion to $2.5 billion.
The shortage was exacerbated in March by a fire at a plant owned by a Japanese electronics supplier, Renesas.
the ability to command higher prices helped Ford’s bottom line, as did lower warranty costs and a $900 million gain related to its stake in Rivian, an electric vehicle start-up.
While it hopes to be able to make up some of the lost production later in the year, Ford will likely produce 1.1 million fewer vehicles in 2021 than it had planned to, Mr. Lawler said.
Ford has been trying to streamline its operations and raise its profits for several years with modest success until now. In 2020, it named Mr. Farley to the top job, charging him with accelerating the turnaround.