Ford Just Reported a Massive Loss on Every Electric Vehicle it Sold

Ford’s foray into the electric vehicle market has hit a stumbling block, with the company’s electric vehicle unit reporting staggering losses in the first quarter, underscoring the challenges facing traditional automakers in the transition to electric mobility.

In a concerning financial disclosure, Ford revealed that its electric vehicle unit, known as Model e, incurred losses totaling $1.3 billion, equating to a staggering $132,000 loss for each of the 10,000 electric vehicles sold during the period. These losses contributed to a decline in the company’s overall earnings for the quarter.

The dismal performance of the Model e unit stands as a stark reminder of the profit pressures weighing on the electric vehicle business at Ford and other automakers. Despite efforts to capture market share in the burgeoning EV market, Ford’s retail EV sales saw a 20% decline from the previous year, with revenue plummeting by 84%, largely attributed to industry-wide price cuts for electric vehicles.

According to Ford, the losses extend beyond the immediate costs of production and sales, encompassing substantial investments in research and development for future EV models. These investments, though crucial for the company’s long-term competitiveness, are yet to yield returns, signaling a prolonged period of losses in the EV unit.

Ford CFO John Lawler acknowledged the uphill battle to achieve profitability in the EV segment, citing intense pricing competition and challenges in cost reduction. Despite efforts to streamline production costs, revenue erosion outpaces cost savings, exacerbating the financial strain on the Model e unit.

Amid the EV losses, Ford remains optimistic about the future of its electric vehicle business, with CEO Jim Farley assuring investors of strategic changes and forthcoming next-generation EV models aimed at restoring profitability.

While Ford’s traditional internal combustion vehicle unit, Ford Pro, emerged as a profit driver in the quarter, with EBIT doubling year-over-year, sales in its consumer-focused unit, Ford Blue, experienced a decline. The contrasting performance underscores the company’s dual challenge of navigating the transition to electric mobility while sustaining profitability in conventional vehicle sales.

Despite the setbacks, Ford’s overall net income fell by 20%, with adjusted earnings per share declining slightly but outperforming analyst forecasts. The company’s struggle to achieve profitability in the EV market mirrors broader industry trends, with competitors like General Motors and Stellantis also grappling with the transition.

As traditional automakers navigate the evolving landscape of electric mobility, Ford’s experience serves as a cautionary tale, highlighting the formidable hurdles and financial risks inherent in the pursuit of a sustainable automotive future.