Can You Guess Why Ford's Net Income Soared In Q4 2021?

Ford's reported net profit includes a massive $8.2 billion gain on its Rivian investment.

By: Steven Loveday

Feb 4, 2022 at 9:48am ET

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Ford released financial information this week, and some folks were in for a surprise. The automaker's net income for the fourth quarter of 2021 soared to a whopping $12.3 billion after a $2.8 billion loss in the same quarter of 2020.

The reason we say this may have come as a surprise is that most automakers are struggling due to the aftermath of the COVID-19 pandemic, as well as the related and persistent global chip shortage. While Ford is among the list of brands facing tough times, it somehow beat the odds, at least as far as net profits were concerned.

The reason Ford was able to secure such an uptick in net income comes down to its earlier investment in Rivian, which went public in November and started delivering vehicles toward the end of last year. More specifically, according to Automotive News, Ford's reported profit includes a massive $8.2 billion gain on its Rivian investment.

As far as adjusted earnings are concerned, Ford reported $2 billion, excluding taxes and interest. This still marks a 19 percent increase for Q4 2021 compared to Q4 2020.

Ford also reported net income for 2021 as a whole, which came in at $17.9 billion. For comparison, in 2020, Ford reported a $1.3 billion loss. That said, Automotive News notes that while Ford's 2021 earnings showed a $7.9 billion profit in North America, the brand lost money in nearly every other area.

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Despite some positive news, Ford stock showed an after-hours drop, which company CFO John Lawler says is likely due to Wall Street's upset over low volumes. He shared that some investors expected Ford to fare better, though the automaker wasn't able to "exceed the volumes we had guided” due to "omicron and semiconductor shortages."