Ford Lost $132,000 For Every Electric Vehicle Sold In Q1 2024
Ford’s electric vehicle division reported a 20 percent drop in sales. The company had to lower prices due to low interest in the vehicles. Ford lost $132,000 on each electric vehicle sold in the first quarter of 2024.
This astounding loss resulted in a total loss of $1.3 billion. Executives are predicting that the electric vehicle sector will face a $5 billion loss this year. This comes at a surprise to many.
Revenue Drop
Ford’s electric vehicle, the Model E, saw its revenue plummet by 84 percent to approximately $100 million. Ford is blaming price reductions in the electric vehicle sector for this drop. The company said, “That resulted in the $1.3 billion loss before interest and taxes (EBIT), and the massive per-vehicle loss in the Model e unit.”
Downward Trajectory
The latest statistics mark an ongoing downward trajectory for Ford, notably reflected in their Model E, which recorded a full-year EBIT loss of $4.7 billion from the sale of 116,000 units. This translates to an average loss of $40,525 per vehicle, representing only a third of the per-vehicle loss observed in the first quarter of 2024.
Investment Challenges
Ford said the losses extend beyond the expenses associated with manufacturing and selling cars. They relate to the hundreds of millions dedicated to the research and development of Ford’s next generation of electric vehicles. However, the returns on these investments are anticipated to materialize in the years to come.
Reduced Costs
Ford’s CFO, John Lawler, said that Ford has managed to reduce costs by approximately $5,000 per Mustang Mach-E. However, he said, “revenue is declining at a rate faster than we can cut costs.”
Delay In Production
Earlier this month, Ford announced a delay in the production of two new electric models, opting instead for hybrid vehicles. This decision is indicative of the company’s strategic shift amidst the challenges faced by its electric vehicle division.
Rushed E.V.s
Sam Abuelsamid is a transportation and mobility analyst at research firm Guidehouse Insights. He said, “Many companies rushed in too fast with E.V.s that were too expensive, and there was not as much of a market for them as they thought. That’s made it a lot tougher to sell those vehicles.”
Hybrid Vehicles
When Ford announced it was going to delay the production of at least two new electric cars, it also announced plans to focus more on hybrid vehicles. This move mirrors similar decisions made by other companies, such as General Motors and Mercedes-Benz.
Challenges In Affordability
Companies continue to try and refine their manufacturing processes for both electric cars and batteries in order to reduce costs. However, these companies have yet to introduce more affordable models to the market.
Ford’s Strategy Shift
A growing number of electric vehicle consumers are turning to hybrid cars because they are often priced only a little bit higher than their gasoline counterparts. Due to this, Ford announced its intention to provide a hybrid variant for every model by the decade’s end.
Ford’s Electric Vehicle Sales Diversity
The Model E represents only a portion of Ford’s electric vehicle sales, with additional sales managed through its Ford Pro unit, which caters to sales for businesses and government entities. Ford has reported robust demand for electric vehicles in this unit, including orders such as 9,250 E-Transit vans from the US Postal Service, over 1,000 F-150 Lightning pickups, and Mustang Mach-E SUVs from Ecolab.
Other Companies
Earlier this week, General Motors stated that its North American electric vehicle sector is set to achieve profitability in the latter half of this year. Stellantis, known for its Jeep, Ram, Dodge, and Chrysler brands in North America, announced that its European electric vehicle sector had turned profitable in 2023.
Tesla
Tesla, the leading electric vehicle manufacturer globally, announced a 48% decline in adjusted earnings for the first quarter. This was alongside a 9% decrease in revenue. This was the company’s first year-over-year sales decline since the Covid-19 pandemic began.
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