Ford Is Losing Billions Building EVs

Michael Accardi
by Michael Accardi
An F-150 Lightning charging with a Ford Pro 48-amp charger

It's no secret that electric vehicle growth in the U.S. market has significantly cratered, presenting a major financial challenge for automakers.

Ford Motor Company has made substantial investments in EV development and battery factories. But the automaker's EV unit, Ford Model e, is reporting huge losses. In the first quarter of 2024, Ford's EV business posted a loss of $1.32 billion–equal to the GDP of a small nation.

And if that wasn't bad enough, Ford Model e also saw a 20% decline in wholesale units and an 84% drop in revenue during the first quarter compared to the previous year. The high costs, particularly for batteries, remain a significant factor. Ford says scaling EV production is essential for reducing these costs.

Unfortunately, the question of EV scale is really just the story of the chicken and the egg repackaged. More scale means more production volume, but that might not mean more customers.

The Mach-E Rally is high profile but doesn't move the sales needle very far, if at all.

For comparison, Ford's traditional ICE vehicle business, Ford Blue, posted a $905 million boon in the first quarter, which was completely wiped out by the substantial EV losses. The third pillar of Ford's business units, Ford Pro, posted a strong $3 billion gain in Q1, helping to keep Dearborn in the black.

However, Ford can't keep siphoning profits from its other business units to offset EV losses. The company is taking several steps to address the financial strain from its EV segment. Ford has begun reducing orders from battery suppliers to help manage EV losses. Additionally, the company announced that its EV battery factory in Marshall, Michigan, will be smaller than initially planned to reflect the slowing demand.

Ford will also cut $12 billion in spending on battery-powered vehicles, delaying the launch of new EVs, and downsizing its battery factories. Notably, Ford has backed away from its 2021 commitment to go all-electric in Europe by 2030, now stating that it will continue to sell internal combustion vehicles if there is demand. None of this sounds like increasing scale.

Despite these adjustments, Ford anticipates that Model e unit losses could reach up to $5.5 billion, continuing to impact the company's bottom line. While Ford has managed to reduce costs for its EVs, it has also had to lower prices to remain competitive, particularly against Tesla's aggressive pricing strategies. Meanwhile, American consumers are growing increasingly weary of EVs, and for good reason.

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Michael Accardi
Michael Accardi

An experienced automotive storyteller known for engaging and insightful content. Michael also brings a wealth of technical knowledge and experience having been part of the Ford GT program at Multimatic and built cars that raced in TCR, IMSA, and IndyCar.

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  • Ninja250 Ninja250 on Jul 01, 2024

    Here's a thought, how about stripping out all the expensive options and building an affordable base model "work truck"? You know, plastic floor mats, no "infotainment", cloth seats, , etc. In other words, the "Model T" of EV trucks. At least that might preserve all those billions in investment, even if returns are less than optimal.

    • Ron Ron on Jul 01, 2024

      I totally agree. There's a huge segment of the market who would love electric but cannot afford all the electronic bells and whistles that manufacturers are trying to force them to buy. There is another much smaller, yet significant segment of the market who are not obsessively fascinated with electronic gadgetry and are therefore simply unwilling to pay extra for features they will never use. Years ago someone pointed out that in the real world, your car does not need to interface with your phone. The reality is, this still remains true.