American multinational automobile manufacturer, Ford Motors, lost about 12 percent shares during the early premarket trade this week after it overlooked earnings projections for the second quarter due to quality-related charges and fierce competition in its electric vehicle (EV) market.

The automotive major showed an adjusted earning of 47c per share, comparatively lesser than analysts’ projected profit of 68c, indicated a data by LSEG.

Early this week, the automotive major was overtaken by its rival General Motors with exceeding profit forecasts.

In the after-hours of Wednesday’s trading session in New York, Ford's shares sank at 11 percent, and eight percent of its shares listed in Frankfurt the following day.

Currently, with a share price of $11.86, the automotive major’s market capitalization is likely to go down by roughly $7.22 billion.

During the second quarter, Ford saw its warranty costs go up by $800 million compared to the previous quarter, severely undermining profits in Ford Blue's combustion and hybrid vehicle businesses.

The reason for the share drop can be due to the Piper Sandler analysts in what they pointed out as ‘unwelcome warranty headwinds’.

After Jim Farley’s appointment as CEO to Ford, the company was observed to be leaning more towards resolving its quality issues.

The automotive major did change some of its production procedures and brought on a new executive director of quality, it still leads the industry in recalls.

With demand for EVs declining, the market shifting to hybrid vehicles, and fierce competition from Chinese and US EV manufacturers, legacy automakers have lowered their aspirations for EVs.

“For now, shareholders will have to take a good quarterly dividend … and special dividends as compensation for up-and-down results that continued to be hampered by warranty problems and slower launch ramp-ups,” said David Whiston, analyst at Morningstar.

Ford is optimistic that its warranty costs will be in line with its projections for the second part of the year.