Ford CEO Jim Farley claims that higher commodity costs countered by pricing, and second quarter will be better

Commodity costs have been a headwind for Ford Motor, according to CEO Jim Farley, who told CNBC’s Jim Cramer on Wednesday that the business has been able to counterbalance them through its pricing strategy.

“The commodity pressure, the premium freight we’re seeing, I mean it’s really real. … The good thing is, our pricing has offset all of that. I believe we’re underearning as a company, so we have more costs to do this year, next year, next couple years,” Farley said in an interview on “Mad Money.”

Steel, aluminium, nickel, cobalt, and lithium are among the commodities where Ford has witnessed increasing costs, according to Farley.

“We had a couple of really bad commodities that held up our most profitable units and we think that’s an area where we have upside in second quarter, second half,” he added.

Wall Street is concerned that increasing expenses and supply chain snarls will put a pressure on GM and Ford’s earnings this year, prompting Farley’s comments.

The company also intends to take further pricing action, particularly on its electric vehicles, according to the CEO. Despite supply chain issues, Farley told CNBC on Tuesday that he expects the business will be able to make 150,000 F-150 Lightning EVs over the next year or two.

On Wednesday, Ford posted first-quarter revenue and profitability that were higher than expected. After hours, Ford’s stock increased by around 1%.

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