Ford attempted to cash in on the electric vehicle craze by producing, among other electric vehicles, and electric version of its famous, highly popular truck, the F-150. But, unfortunately for the auto manufacturer, the F-150 Lightning has been anything but an EV craze cash cow, with Ford slashing production numbers of it and laying off workers on the Lightning assembly line as it loses six figures on every Lightning sold.
In fact, according to Ford’s earnings report for the first quarter, its foray into electric vehicles, one pushed along by the Biden Administration’s EV focus, has caused it significant losses. In the report, Ford notes that it loses about $132,000 per vehicle for every electric vehicle it sold in the first quarter of 2024.
According to CNN, which reported on the brutal hit to earnings for Ford from the EVs, its EV unit, called Model e, sold just 10,000 vehicles in the first quarter. That low number was down significantly from the already low results from a year earlier, with sales down by about 20% compared to 2023.
Further, Model e only managed to make about $100 million, a monumental 84% crash from the year before, Ford attributed that huge loss to price cuts across the EV industry, cuts that might make sense for moving inventory given the precarious state of the economy but which were no benefit to Ford’s bottom line. In fact, overall, the segment suffered a $1.3 billion loss before interest and taxes, while Ford overall managed about $2.8 billion in adjusted EBIT.
That poor performance was something of a departure from the rest of Ford, as overall, its first-quarter earnings were treated positively, leading its stock to rise by about two and a half percent in after-hours trading. While slowing consumer demands and price cuts remained problems, its combustion-powered and hybrid cars sold relatively well.
CNN added that the massive Model e losses include the large research and development costs incurred in developing the vehicles, and that Ford expects Model e will have EBIT losses of $5 billion for the full year. In 2023, the Model e segment saw an EBIT loss of $4.7 billion, losing about slightly over $40,500 per vehicle sold, making this year’s performance far worse by comparison. Part of the problem is that when paired with price cuts, the research and development costs make profitability quite difficult.
Explaining the situation, it notes that Ford CFO John Lawler noted that though Ford shaved off $5,000 in costs from the electric Mustang, the Mustang Mach-E, those vehicles are still a net loss because, with price cuts and a lack of consumer interest, “revenue is dropping faster than we can take out the cost.”
Ford’s EV profitability problems come as auto dealers around the nation call on Biden to tap the brakes on his EV agenda. Writing a letter requesting as much, they said, in part, “Mr. President, it is time to tap the brakes on the unrealistic government electric vehicle mandate. Allow time for the battery technology to advance. Allow time to make BEVs more affordable. Allow time to develop domestic sources for the minerals to make batteries. Allow time for the charging infrastructure to be built and prove reliable. And most of all, allow time for the American consumer to get comfortable with the technology and make the choice to buy an electric vehicle.”
"*" indicates required fields