Ford Motor Company has reported $1.3 billion in losses on its Model E sector or a staggering $132,000 loss for each of the 10,000 vehicles sold during the first quarter of 2024.
The electric vehicle (EV) unit, known as Model E, saw a 20 percent decrease in sales compared to 2023, with only 10,000 EVs sold in the first quarter of this year. In 2023, Model E reported full-year earnings before interest and taxes (EBIT) loss of $4.7 billion on sales of 116,000 EVs, averaging about $40,525 per vehicle. The total loss is just over a third of the first-quarter loss. Meanwhile, the revenue for this year also took a massive hit, dropping by 84 percent to around $100 million due to price cuts for EVs throughout the automotive industry.
As a result, the unit reported a loss of $1.3 billion in EBIT.
These losses extend beyond just the production and sale of the 10,000 cars. Ford clarified that they also include substantial spending on research and development for future EVs, which will not yield returns in the next few years. Consequently, Ford anticipates that the Model E will incur EBIT losses of $5 billion for the entire year. (Related: Ford drastically cuts EV factory workforce as electric car sales plummet.)
In response, Ford seeks to align EV pricing with the actual costs of building each vehicle, rather than covering all research and development expenses within the next 12 months.
However, John Lawler, the chief financial officer of Ford, stressed the challenge of achieving profitability amid a prolonged price war in the EV market. Despite cost reductions, such as a $5,000 decrease in expenses per Mustang Mach-E, revenues are declining faster than costs can be cut.
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Ford CEO remains in denial about the disappointing performance of their EVs
Model E has not been able to monopolize the EV sales of the company. Instead, a portion of these sales falls under the purview of Ford Pro, a unit catering to fleet sales for businesses and government agencies.
Unlike Model E, Ford Pro has seen an uptick in demand for the division's EVs, including a massive order from the United States Postal Service for E-Transit vans and an order for F-150 Lightning EVs and Mustang Mach-E electric SUVs from the Minnesota-based corporation Ecolab.
The Postal Service placed an order for 9,250 E-Transit vans, all of which are scheduled to be delivered by the end of the year. Ecolab, a prominent global sustainability firm, placed an order for over 1,000 units each of the F-150 Lightning EV and the Mach-E SUV.
The contrasting performances of Model E and Ford Pro have affected the overall net income of the company, which declined by 20 percent compared to the first quarter of 2023. But Ford CEO Jim Farley is still in denial about the disappointing performance of their EVs.
Farley even told investors that the company is already working to bring revenue back up. He added that he expects the company to earn from EVs soon.
Visit RoboCars.news for more stories related to the constant push to switch to electric cars.
Watch this clip from "Barron's Roundtable" on Fox Business as host Jack Otter interviews Ford CEO Jim Farley about the risks associated with a widescale shift to electric vehicles.
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Ford resumes Michigan EV battery plant but reduces production capacity by 40%, drops about 800 jobs.
Ford lowers prices of F-150 Lightning electric trucks by up to $10,000 as EV sales falter.
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