It's been a rocky year for the automotive industry, with rising interest rates, economic uncertainty, and chip shortages that have made inventories difficult. While Ford Motor Company's (F -0.84%) cross-town rival, General Motors (GM -0.10%), largely impressed Wall Street with strong third-quarter results, Ford's third quarter was a wider range of good, bad, and ugly. Let's dig in.

Good news, first

As investors sift through Ford's third-quarter results, one highlight sure to catch your eye is the improving cash flow. Ford's third-quarter operating cash flow was $3.8 billion, and adjusted free cash flow checked in at $3.6 billion, driven by the company's strong automotive cash generation.

The improved cash flow gave management confidence to boost its full-year adjusted free cash flow target to between $9.5 billion and $10 billion, a sharp increase from the prior $5.5 billion to $6.5 billion estimates.

It's obviously good news for investors to see such cash flow from a company in a capital-intensive industry, but the cash flow also helped boost Ford's cash and liquidity to $32 billion and $49 billion -- a nice cushion with economic and vehicle demand uncertainty on the horizon.

In addition to the cash cushion, the cash flow helps support the company's valuable $0.15 quarterly dividend, which sits at a healthy 4.49% yield.

It's also important for investors to understand this isn't a one-time spike, as Ford has had a long trend of consistent free cash flow.

F Free Cash Flow Chart.

Data by YCharts.

While the improving cash flow was good news and enabled the company to weather economic uncertainty and invest in growth through developing and redesigning its vehicle lineup, not everything in Ford's third-quarter report was as great.

The bad news

After a bumpy year in the automotive industry, investors likely aren't surprised to hear that chip shortages caused headaches yet again. Those supply shortages left roughly 40,000 vehicles that are built but awaiting parts at the end of September.

Supply chain disruptions cost Ford roughly $1 billion in higher-than-expected supplier payments, which isn't great news, no matter how you slice it.

The silver lining is that Ford expects to complete those vehicles and sell them to dealers during the fourth quarter.

The downright ugly news

Argo AI, a self-driving start-up that was largely backed by Ford and Volkswagen Group, announced it would shut down operations after failing to attract new investors. That development caused Ford to record a massive $2.7 billion non-cash, pre-tax impairment on its investment in Argo and drove the $827 million net loss during Ford's third quarter.

Not only was that a massive blow to Ford's bottom line, but it also pushed management to change its strategy on autonomous vehicle development.

Rather than developing large-scale level 4 advanced driver assistance systems (ADAS), which the company now believes to be far away from profitability and scale, it will refocus on developing level 2 and level 3 systems -- those systems, at the very least, could provide a better consumer experience in Ford vehicles.

The bottom line

While the pain from Ford's Argo write-off stings currently, it might prove to be the wise long-term decision. Management now believes it can wait for others to develop this expensive technology that it believes is a long way away from helping the company generate meaningful profits.

Overall, Ford managed to increase its top-line revenue by 10% despite supply chain issues while improving cash flow and resetting its focus on expensive autonomous vehicle development. While it didn't have as dazzling of a third quarter as its cross-town rival, General Motors, it was still a solid quarter amid a year of uncertainty and is proof management is focused on deploying capital or cutting its losses in ways that benefit investors.