Ford is the No. 2 vendor of electrical autos within the US. It’s very pleased with that reality, however the amount of money it needed to burn to get there is sufficient to make you wonder if it may maintain that title.
The corporate reported its first quarter earnings final night time, and woo boy, it’s tough
The corporate reported its first quarter earnings final night time, and woo boy, it’s tough. Ford mentioned it misplaced $1.3 billion on the sale of 10,000 electrical autos within the first three months of the yr — a staggering determine that quantities to $130,000 misplaced for each EV bought.
Ford’s Mannequin e division, which oversees a few of the firm’s EV gross sales in addition to software program, reported $100 million in income, an 84 % drop from the identical interval final yr. The variety of autos bought (10,000) was additionally down from the primary quarter of 2023 by 20 %. Ford blamed “pricing stress” — principally pushed by Tesla’s rampant worth cuts — and “slower progress” as clients have cooled on electrical autos.
To make certain, Ford Mannequin e doesn’t deal with all the corporate’s EV enterprise. Ford Professional, its business division, additionally sells electrical F-150 Lightning vehicles and E-Transit vans. Earlier this month, Ford said it sold a cumulative 20,232 EVs in the course of the first quarter, which was an 86 % improve over Q1 2023 however a 22 % drop in comparison with the earlier quarter.
Ford misplaced $1.3 billion on the sale of 10,000 electrical autos
So what’s going to staunch the bleeding? For one, the corporate plans to spend less than it previously said it would — to the tune of $8 or $9 billion, quite than $10 billion.
“We’ll most likely be on the low finish of that vary,” Ford CEO Jim Farley mentioned in a name with traders. “And we’re being very constant about our self-discipline on profitability.”
One other factor it says will assist deliver its EV enterprise into steadiness is new applied sciences, like “new battery chemistry and codecs to considerably scale back the price of the batteries for that car.”
These embrace a lithium iron phosphate chemistry that Ford says is extra sturdy, sooner charging, and extra reasonably priced than its present lineup of EVs, which largely depend on nickel cobalt manganese (NCM) chemistries.
Ford has been creating these new chemistries with China’s Modern Amperex Expertise Co., Restricted (CATL), a world producer of EV batteries — although the automaker burdened that it’s going to personal and function the plant outright by its wholly owned subsidiary and that the Chinese language firm will solely present “information and companies.” Preliminary manufacturing is anticipated to start in 2026.
One other main guess is on Ford’s Silicon Valley-based skunkworks group, which is being led by ex-Tesla government Alan Clarke. These designers are engaged on a next-generation platform of smaller, extra reasonably priced EVs, which Ford is betting might be a giant assist in successful over city dwellers.
“We imagine that’s the place the adoption of EV will develop the quickest,” Farley mentioned of metropolis residents. “And we imagine we are able to compete in segments of small vehicles and autos, extra reasonably priced autos in a novel method that’s Ford.”
Remember, this is identical firm that discontinued all of its sedans and hatchbacks six years in the past in favor of constructing huge SUVs and vehicles, concluding that bigger autos would drive greater revenue margins.
They did — and nonetheless do at this time. Ford’s gas-guzzling SUVs (Escape, Explorer, Expedition, and Bronco) had a historic quarter, which the corporate is asking its “all-time finest.” The corporate bought 216,997 SUVs — up 15 % over final yr.
Sedans just like the Ford Focus, Fiesta, and Fusion have been cash losers — very like the Mustang Mach-E and F-150 Lightning are at this time. For the corporate to say that smaller, extra reasonably priced vehicles might be its salvation from future losses is a bit ironic.