Ford Motor Co.’s ambitious EV strategy encountered significant financial headwinds in the first quarter of the 2024 calendar year, with the automaker losing approximately $100,000 for every EV sold. Ford is now looking to reduce costs amid waning demand for new all-electric vehicles. GM has also shifted its EV strategy, and now plans to reintroduce plug-in hybrid models to the North American market.
Ford’s EV losses stem from a variety of challenges, which, in addition to reduced demand, also include intense competition and substantial investments in new technologies that have yet to yield returns. In response, Ford has opted to scale back some of its EV operations. According to a report from Bloomberg, this includes reducing orders from battery suppliers like South Korea’s SK On Co., LG Energy Solution Ltd., and China’s Contemporary Amperex Technology Co. Ltd.
Ford’s Model e division, dedicated to electric vehicles, is currently under financial strain, prompting the automaker to cut spending by $12 billion and delay the launch of new EV models. These measures are part of a broader strategy to curb the financial bleed and are coupled with price reductions aimed at boosting sales amidst declining market prices.
Financial analysts from Bloomberg Intelligence suggest that the substantial losses in the EV sector may nearly offset the profits from Ford Blue, the division responsible for traditional ICE-based vehicles. The situation raises concerns about the sustainability of heavy investments in electric vehicles during a period of market retraction and customer hesitancy.
The changing EV landscape is affecting the supply chain as well, with major price declines for critical metals like lithium, cobalt, and nickel, all essential components of EV batteries.
Despite these challenges, Ford remains committed to transitioning towards electric vehicles as part of its long-term strategy, underscored by the development of more affordable EVs slated for release in late 2026. These new models are expected to be profitable within their first year.
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Comments
So the $100,000 per vehicle loss continues to be broadcast. The question is does this include the R&D costs that are for the most part, a one-time sunk cost, or is Ford’s manufacturing so inefficient that they’re actually losing this much on each vehicle manufactured?
That is the correct question. It’s the difference between an interesting statistic and a horrifying fact.
And sadly others are spewing it as if a vehicle is being manufactured at a given piont of time and costs them 100k plus at that moment to make!
Yes, yes and yes.
I believe the breakdown is 20K/unit losses for EV material costs, another 20K for R&D, and the lions share is the money they dropped into manufacturing lines at 60K per unit.
This does pale with GM who last I heard is loosing 10-15K per EV, and that’s largely for the fact EV’s are more expensive to build. That’s also because they retrofitted the hamtrack facility as well as smaller R&D facilities to produce EV’s vs fords “blue oval city”
Regardless. It looks like EV’s are too expensive for the average consumer as these units need to be 10-20K cheaper and OEM’s still need to turn 5-10K profit per unit, not a net loss. We also now have productions of scale enough that additional production will only bring down costs another 5-10% at most. Not by the required halving to quartering that’s needed.
Sounds like the Blackrock, Vanguard, State Street, WEF agenda continues to lose companies BILLIONS. Bummer.
These are all companies with significant investments in Chinese companies like BYD (and well, WEF is basically inspired by authoritarian rule where “in the future, you will own nothing and like it.”) They aren’t interested in American companies or American economy surviving. They are interested in undermining democracy and investing in the destruction of the US economy and US prosperity by investing in such adversaries.
This is the future! LOLOL.
LMFAO…..wake up people! This isn’t the future and the price of these EVs are not worth $60, $70, $80, $90, or $100k!!!
Good thing the Equinox EV starts at $41,600 for the 2LT and is expected to start at $34,995 for the 1LT. Both have a 319 mile range on an 85 KWh usable battery.
As for the prices you mention, no vehicle is worth that much money, regardless of drive train.
I have to ask the question. Is it only the Americans losing all this money on EVs or are the Euro brands and Koreans also taking a hit? No I am understanding why the Japanese were like “Yeaaah f@#$ that. We’ll stick to hybrids and have one EV to offer.”
What do you expect when the crooked inept government dictates to car makers what you are to build and clueless woke CEOs pander to them instead of fighting for their employees, customers, and dealers.
Apparently, it’s only Ford.
ford should have just mary msrp barra the msrp to 200k per unit and they would have made money on each EV sold!
ford should hire me as their product manager.
Agree that the numbers are astounding, but hard to fully understand until you see the accounting behind them.
As soon as gas prices shoot back up (and they will the closer we get to the 2024 election) EV sales will head in the positive direction. Whether companies make money on them is another story however whenever gas prices get way out of line people want alternatives. It’s been happening since the oil embargo of the early 70’s. Whether it is smaller cars and trucks, front drive cars, diesel cars and trucks or EV’s, when people see large dollars amounts getting pumped into their transportation they want other choices. It may not necessarily even be smart choices but they think that they need change.
Good! I don’t want an electric cord shoved down my throat.
Why do automotive forums like this have to get offensively political? That negative comment adds nothing to the subject.
Should be only two choices for any vehicle:
ICE or HYBRID. End of subject.
With today’s technology, no passenger vehicle should be pure ICE. At a very minimum they should all be hybrid and preferably a plug-in hybrid. The options should be classic gas hybrid or plug-in electric hybrid. Don’t call the classic gas hybrids electric though as they aren’t.
The other option is BEV, but as Honda discovered with the 2018-2020 Clarity, BEVs, PHEVs, and FCEVs all have significantly different engineering requirements so putting a BEV and PHEV on the same platform is going to be extremely expensive and require two manufacturing lines.