Ford Losing $100k On Every EV: Report
Making electric vehicles is a pricey venture for automotive brands and the reduction in demand with the constant need to cut prices to stay competitive is putting automakers in a tight position. Ford, which sells the all-electric Mustang Mach-E, F-150 Lightning, and E-Transit, lost $100,000 on every electric vehicle it sold in the first quarter of 2024, reports Bloomberg. Ford’s losses from its electric Model e division are so high that the outlet estimates that they could wipe out all of the profits that its Ford Blue division, which focuses on vehicles with an internal combustion engine, brings in.
With Ford’s Model e division losing roughly six figures on every EV the brand sells, the automaker has started to cut orders from its battery suppliers to attempt to stop some of its losses. The decision, which comes from unnamed sources who are familiar with the automaker’s plans, comes at a time when Ford is scaling back its ambitious plans for EVs.
In an attempt to stop losing so much money on its electric cars, Ford is rethinking its EV strategy, claims the outlet. The automaker plans to reduce spending by $12 billion on its electric vehicles, delaying new electric car launches, cutting prices, and postponing and reducing plans for new battery plants, reports Bloomberg. According to Ford’s CEO, Jim Farley, the automaker has forecasted a loss of up to $5.5 billion from EVs, as he stated that the Model e division “is the main drag on the whole company right now.”
Seeing a traditional automaker like Ford losing $100,000 per EV it sells is a staggering figure, but losses and investments are part of the automotive business. When Ford switched to aluminum for the F-150, it did so to the tune of approximately $3.6 billion in lost revenue, reported Yahoo Finance in 2014. At the time, Ford CEO Mark Fields stated it was up to leaders like Ford to “set new standards through innovation.” Ford’s way of thinking has certainly changed quite a bit in the past decade.
Still, Ford’s struggles paint a dim picture for EV brands. Bloomberg claims that automakers in the U.S. are changing their plans to account for diminished EV demand, while battery companies in South Korea, China, and other countries have a backlog of unsold batteries for EVs. This has created supply chain issues that have resulted in different pricing for key metals, different investment decisions, and mine closures, claims the outlet.
“We’ve seen prices coming down quite dramatically and that’s why we haven’t been able to keep up from a cost reduction standpoint,” John Lawler, Ford’s chief financial officer, told analysts during the company’s earnings call, reports Bloomberg. “But we’re targeting to take out as much cost this year as we can on Model e and all in the spirit of driving toward that contribution margin positive.”
Despite losing money on every EV it sells, Ford is reportedly fast-tracking the development of small, affordable electric cars. A model that costs $25,000 is expected to make its debut in 2026. These affordable vehicles are expected to become profitable within the first year of sale. Profitability is key for Ford’s Model e division, as the automaker wants the division to stand on its own.
Pictured: 2024 Ford F-150 Lightning (Top), 2024 Ford Mustang Mach-E (Middle)
Source: Bloomberg
