“Ford Lost Another $1.2 Billion in 3Q On EVs” by Robert Bryce FoMoCo lost $58,391 for every EV it sold during the quarter.
“Ford Lost Another $1.2 Billion in 3Q On EVs” by Robert Bryce FoMoCo lost $58,391 for every EV it sold during the quarter.
“So why didn’t Ford and the other automakers see this debacle coming? Was it herd mentality? Were they responding to government pressure? If so, why didn’t they push back?”
Ford Lost Another $1.2 Billion in 3Q On EVs
FoMoCo lost $58,391 for every EV it sold during the quarter.
OCT 28
The ugly EV news from Ford Motor Company just keeps coming. This afternoon, the company reported that it lost $1.224 billion in its EV business during the third quarter. In early October, the company reported EV sales “were up 14.8 percent on best-ever sales of 20,962 vehicles.” Thus, simple division shows that the storied automaker lost $58,391 for each EV it sold during the quarter.
The company’s losses on its EV business, known as Model e, for the first nine months of 2024 total $3.7 billion. For reference, that $3.7 billion loss is equal to the profit (Ford calls it EBIT, short for earnings before interest and taxes) it made on Ford Blue, the division that makes internal combustion vehicles.
Alas, these results aren’t surprising. Ford has been hemorrhaging cash on EVs for the past two years. It lost $4.7 billion on EVs in 2023 and $2.2 billion on EVs in 2022. The third-quarter numbers simply show, yet again, that Ford’s leadership has made a colossal blunder. CEO Jim Farley and his lieutenants didn’t understand what motorists want to buy. That’s a bad thing if you’re running one of the world’s biggest car makers.
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FoMoCo’s third-quarter losses are being made public just two months after the company announced it was killing a planned three-row, all-electric SUV. In August, the company said, "With pricing and margin compression, we've made the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT within the first 12 months of launch for all new models.”
In other words, Ford was warning two months ago that it was having to slash prices on its EVs and that the third quarter would be a stinker. And it was. Also in August, the company said it was going to move some of its battery production out of foreign factories into US locations so it could qualify for more federal subsidies available under the Inflation Reduction Act. As I reported here last year, Ford and other automakers are aiming to collect tens of billions of dollars via the 45X tax credit in the IRA for making batteries in the US. For instance, Ford is building a battery plant in Marshall, Michigan, which is expected to create about 4,200 jobs. According to Good Jobs First, each job at the new Ford plant will cost taxpayers $3.4 million.
While Ford can claim its sales have increased, the fundamental problems in the EV market have not changed. As seen above, the credit rating agency Morningstar, which 13 months ago was forecasting huge growth in EVs, has now turned negative on the sector. In an October 21 report titled, “Are Electric Vehicles Short-Circuiting? Auto Manufacturers Revise Electrification Strategies After Slowing Demand,” (registration required) Morningstar said the major automakers, including VW, Ford, GM, and Mercedes, have delayed their EV plans or slashed planned output due to weak sales. Morningstar noted that while some automakers, including Ford, have cut prices, that has hurt their profitability. It also says that with EV sales “to early adopters now seemingly exhausted, EVs are struggling to maintain ongoing sales momentum among mainstream consumers.”
Morningstar then listed the issues that have plagued EVs for decades:
EV ranges remain significantly affected by extreme weather conditions, with cold weather (i.e., below 40 degrees Fahrenheit) potentially decreasing range by about 25%). Concerns about the EV charging infrastructure are exacerbated by lackluster reliability records of public EV charging stations. Moreover, charging times, notwithstanding significant developments in recent years, remain considerably longer than the typical time it takes to refuel a conventional ICE vehicle. Additionally, while EVs have fewer parts than ICE models and typically require less maintenance than ICE vehicles, one-off repairs (notably involving the EV battery pack) can prove inordinately expensive. Accordingly, across most jurisdictions, insurance premiums for EVs are typically higher than for comparable ICE vehicles, mainly because of the potentially markedly higher repair costs. (Emphasis added.)
That paragraph pretty well sums up the EV marketplace, particularly regarding cold weather, charging infrastructure, and charging times. (See this story on Hertz for more on the repair cost issue.) All those problems have been evident since the days of Edison. So why didn’t Ford and the other automakers see this debacle coming? Was it herd mentality? Were they responding to government pressure? If so, why didn’t they push back? What did they know about EV demand from their own market research?
Here’s my prediction: A few years from now, after the automakers have lost billions more due to their misplaced bets on EVs, business schools and analysts will be asking those very same questions.
Two realities on EV. The purchase price is too high. Then comes the other reality. Most homes cannot handle the plug. To recharge & not sure about the U.S. but I would say more tgat the electrical system. Would not be able to handle that type of demand. Then the reality most people like to travel & a good efficient gas burning car has the service to handle, getting gas, repair in any town,parts, but I do support the potential benefits of an EV but.like going from horse & buggy to auto. Took time. 2WW. & a lot of time & various innovator, inventor's several economic down turns to get to where we are now. We have come further in the last 20yrs due to modern day thinking by the young. Based more on Star Trek(1968) sustainable thinking. Only to have those that seem to put $$& self interest of a privileged few a head of change. Has you here” I understand we need change. Just as long as what you change. Has no impact on the benefits to me & my support system” unfortunately, 50 yrs fixing what $$ screwed up. Someone aways had to give up something to get what was in the best interest of all the community. The government d one can help make a difference. Still make a living. By using innovation & community collaboration to open doors $$ & self interest see as a treat. Only at sometime the.” Tide of Change” started long before the $$ boys saw it coming & at the point now. The young on a global scale realize it’s their future & between COVID & Mother Nature. The universe seem to be saying it agree. The $$ boys already lost. The ? Is not are we head to a Star Trek (1968) federation reality. Everything already there. The young see value in horse & buggy vision. But do understand it does have a place. Just no longer at the head of the table. How we get there is in play.
The EV debacle is the single worst example of US industrial policy. Its failure will last as long as the historical smell of Gettysburg, James.