Zhongtong Finance APP learned that Ford Motor (F. US) announced that due to slowing demand and high inventory, it will temporarily halt production of its all-electric F-150 Lightning pickup truck. After this news was released, the company's stock price declined slightly, but the market may have overreacted, as investors were already aware of the slowdown in demand, and perhaps should focus more on cost issues.

This production pause affects the Rouge Electric Vehicle Factory, which will no longer operate on weekends starting on November 15 (Friday) and is scheduled to resume production on January 6. Considering the holiday factor, this production stoppage will result in a reduction in output by approximately six weeks.

Ford Motor Company stated in an email declaration: "We will continue to adjust production to achieve the best combination of sales growth and profitability."

At the close, Ford fell by 1.72%, to $10.29. The S&P 500 index fell by 1.86%, and the Dow Jones Industrial Average fell by 0.9%.

As of September, Ford has sold approximately 23,000 Lightning pickups in the USA, a nearly 90% year-on-year increase. However, in 2022, Ford had hoped to achieve an annual sales volume of 150,000 vehicles, accounting for about 20% of all F-150 sales. Yet, the market demand growth did not meet expectations.

Ford's electric vehicle business incurred a loss of $1.2 billion in the third quarter and a total loss of $3.7 billion in the first three quarters. It is crucial for the company and investors to reduce the losses from the electric vehicle business. Closer adjustment of supply and demand relations will help reduce losses.

According to the data from BNP Paribas, as of the end of the third quarter, Ford dealers' inventory is roughly equivalent to 90 days of sales, while automakers typically prefer to keep inventory at around 60 days. When inventory levels are too high, it may be necessary to rebalance supply and demand through production cuts.

Ford's six-week production suspension this time is equivalent to two months of current Lightning sales, which will help restore supply-demand balance. As of Thursday, Ford's stock price has fallen by about 15% year to date. Increased costs and lower-than-expected profit margins have weakened investor confidence.