Essay by Eric Worrall
First published JoNova; Ford CEO Jim Farley still plans to push forward with his loss making electric vehicle strategy.
Ford just reported a massive loss on every electric vehicle it sold
By Chris Isidore, CNN
Updated 2:10 PM EDT, Thu April 25, 2024New YorkCNN —
Ford’s electric vehicle unit reported that losses soared in the first quarter to $1.3 billion, or $132,000 for each of the 10,000 vehicles it sold in the first three months of the year, helping to drag down earnings for the company overall.
Ford, like most automakers, has announced plans to shift from traditional gas-powered vehicles to EVs in coming years. But it is the only traditional automaker to break out results of its retail EV sales. And the results it reported Wednesday show another sign of the profit pressures on the EV business at Ford and other automakers.
The EV unit, which Ford calls Model e, sold 10,000 vehicles in the quarter, down 20% from the number it sold a year earlier. And its revenue plunged 84% to about $100 million, which Ford attributed mostly to price cuts for EVs across the industry. That resulted in the $1.3 billion loss before interest and taxes (EBIT), and the massive per-vehicle loss in the Model e unit.
The losses go far beyond the cost of building and selling those 10,000 cars, according to Ford. Instead the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off.
And that means this is not the end of the losses in the unit – Ford said it expects Model e will have EBIT losses of $5 billion for the full year.
…
Despite the EV losses, Ford CEO Jim Farley said in a call with investors the company is making changes in its EV business, and that the company’s planned next generation of EVs will allow it to be profitable on that business in the near future.
…
Read more: https://edition.cnn.com/2024/04/24/business/ford-earnings-ev-losses/index.html
What can I say? If you find yourself in a hole, you should stop digging.
Not many people know that Henry Ford and Thomas Edison were good friends, and together tried to develop an electric automobile.
Henry Ford and the electric car
Daniel Strohl
05/25/2010photo from the collections of The Henry Ford
That Henry Ford and Thomas Edison became good friends later in their lives is well known. …
That Edison and Ford later put their minds together to conceive a low-priced electric car is not so well known.
…
… In early 1914, word had gotten around that work had started on a low-priced electric car. … Ford himself even confirmed the rumors in the January 11, 1914, issue of the New York Times:
Within a year, I hope, we shall begin the manufacture of an electric automobile. I don’t like to talk about things which are a year ahead, but I am willing to tell you something of my plans.The fact is that Mr. Edison and I have been working for some years on an electric automobile which would be cheap and practicable. Cars have been built for experimental purposes, and we are satisfied now that the way is clear to success. The problem so far has been to build a storage battery of light weight which would operate for long distances without recharging. Mr. Edison has been experimenting with such a battery for some time.
… we know for a fact that at least one experimental Ford electric was built in 1913, …
…
… the downfall of the Edison-Ford electric car came about because Ford demanded the use of Edison’s nickel-iron batteries in the car, and would have no other battery powering this car. Edison’s batteries, however, were found to have very high internal resistance and were thus incapable of powering an electric car under many circumstances. Heavier lead-acid batteries (which would have made the car too ponderous) were substituted behind Henry Ford’s back, and when he found out, he went ballistic. The program quickly fell to the wayside with other projects demanding Henry Ford’s time. According to The Ford Century, Ford invested $1.5 million in the electric car project and nearly bought 100,000 batteries from Edison before the project fell apart.
…
Read more: https://www.hemmings.com/stories/2010/05/25/henry-ford-and-the-electric-car
Perhaps Ford CEO Jim Farley imagines himself as Ford’s successor, paying homage to the great man who founded his company by trying to make Ford’s original dream of a commercially successful electric vehicle a reality.
If this is the case, Farley should also maybe consider the other lesson Ford’s EV experience provided, that after burning $1.5 million on the project (in 1914!), Henry Ford finally woke up and realised it was time to pull the plug.
Jim Farley still plans to push forward with his loss making electric vehicle strategy.
Others aren’t convinced
Stellantis has threatened to slash its presence in the UK in response to the ‘terrible’ ZEV mandate.
The carmaker’s boss, Carlos Tavares, has been speaking to the national media this week, amid reports the company is unhappy with net zero measures currently being pursued by the UK government.
Tavares said that the current ZEV mandate is ‘terrible for the UK’ and suggested that Stellantis may be forced to cut back the number of cars it sells here as a result.
https://cardealermagazine.co.uk/publish/stellantis-boss-threatens-to-slash-uk-presence-in-response-to-terrible-zev-mandate/301061
Found
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Dead
Fix
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😄
(Chevy fan, here 🙂)
I find the math very suspect. Are all losses due to electric vehicles? Maybe they are all due to the CEO. Ford lost $1.3 bn for each CEO in the first quarter.
No, it was the Ford Model E that was the cause of dismal sales and $132.000 per vehicle loss.
Read his comment again without being so serious this time.
re: “CNN: $132,000 Loss on Every Sale of an Electric Ford Vehicle ”
Yes, but, they will make it up on volume.
(Old marketing joke one presumes.)
That’s the problem, not enough volume to offset the massive investments.
You’re actually correct – more volume would help reduce the per-vehicle cost of the r&d and the overhead.
Don’t read too much in the loss/vehicle numbers – they’re not the material and labour costs only. The article just took the total loss and divided it by the volume.
“Don’t read too much in the loss”
Ford can try to spin that loss into good news, tap dance and predict a glorious future but that number is a big steaming pile of doo doo.
Ford sold 508,083 vehicles of which 20,223 were EVs in Q1, up +86% over Q1 2023, making Ford America’s second best-selling EV brand behind Tesla for the quarter.
Ford sold 9,181 EVs last month, up 338% over March 2023 (from a low base of 2,096). It’s the second-highest monthly result ever recorded
Ford sold 38,421 hybrid vehicles in the first three months of 2024, representing an increase of 42 percent compared to Q1 in 2023
These are real data
Everything else is over optimistic predictions and EV cheerleading
Just stop making them
Our government overlords are mandating all-EV personal transportation, therefore it will happen on schedule and at affordable prices. Anybody disagreeing with that is an evil denier.
So it is written, so shall it be done…
Some pharaoh or other…
Evil Denier -> ME! ME! ME!!!!
Stupid got us into this, maybe stupid can get us out.
On Thursday, the federal and Ontario governments announced that they will be doling out an estimated $5 billion in corporate welfare to Honda, so the auto giant can build an electric vehicle (EV) battery plant and manufacture EVs in Ontario.
This is the third such deal in Ontario, following similar corporate welfare handouts to Volkswagen ($13 billion) and Stellantis ($15 billion).
https://nationalpost.com/opinion/taxpayers-are-the-big-loser-in-honda-plant-deal
And Honda has a business plan that allows them to compete with Chinese-subsidized battery and EV companies? Just who do these “government industrial planners” expect to provide the raw materials at reasonable prices that go into these devices? An unfriendly government and cut-throat competitors?
“Just who do these “government industrial planners” expect to provide the raw materials at reasonable prices that go into these devices?”
‘Goverment industrial planning’ ends with the press release. That is the plan.
Imagine an entire economy run by such idiot mandates, and we see why communism doesn’t work.
That and the body counts.
The Postal Service is reportedly getting into the EV ring. Same ones who thought tricycle delivery vehicles were a
great idea.
Mr. jo: I’ve been saying this for at least a decade- until the post office switches over to EV, we’ll know EVs are not taking over any market. And I hear the ICE engine mail truck pull up as I type.
That being the case, they are going to have to totally change their motto: ““Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.”
Tesla envy can be quite expensive. Hertz found out, and now Ford found out. Fisker is already DOA for the second time.
Toyota never got Tesla envy, choosing instead to double down on hybrids beyond Prius. Hybrid Camry, hybrid Lexus minting money.
We own a MY 2007 Ford hybrid AWD Escape with class 1 tow hitch. Car has already saved us over $14k in gas over the comparable V6 (50% better mileage and regular not premium). Because of the way hybrids work (traction battery floats around half charge, never full, never empty), the original battery is still good.
That’s interesting Rud.
How does that compare all in, including up front cost, depreciation, and maintenance? I’ve never seen a lifetime comparison.
When we bought the hybrid Escape summer of 2007 the hybrid premium was exactly $3000 over the comparable V6. Not coincidentally $3000 was the federal hybrid tax credit available in 2007. So the hybrid cost exactly the same as the comparable V6 on day 1.
The fuel savings tricks are several. Engine off at stop. Regen braking. 140 HP atkinson cycle I4 versus heavier Otto cycle 205 HP V6. With hybrid electric machine and battery both cars weight and tow about the same. Atkinson cycle picks up 15% fuel saving per cylinder at expense of torque, which doesn’t matter since we have the hybrid electric machine providing the equivalent of 72HP and all torque. V6 was 18 city/21 Hwy, avg ~19.5. Hybrid is 32 city/28 Hwy at 70mph, avg ~30. So ~50% more mpg using regular costing here about $1.25 less than V6 premium. That is how I calculated our fuel expense savings to now.
As for depreciation, the Ford dealer where we have the car serviced just offered $5.5k as a trade in! Car is 17 years old and has just over 90k miles, low now since after we retired mostly just driving to our mountain cabin in north Georgia where we need AWD. We towed one of my motorcycles up there from Fort Lauderdale—no problem.
Is 750 miles each way. We make each way easily on 2.5 12 gallon tank fulls. We usually put in just 10 to 11 gallons
The only exclusively hybrid related maintenance in 17 years was a battery compartment cooling fan replacement for $29. All other maintenance (tires, oil, filters, engine tune, shocks, brakes) bog standard.
We live directly on the ocean, so from salt spray there was a bit of body rust starting to show in places. So last year we put a few thousand into full rust removal and all new body paint. We plan to keep the car many more years.
By comparison, our other car here is a ragtop BMW 325i now 24 years old. Had to fully rebuild the suspension when the rubber parts went—many $thousand. New cylinder head and pan gaskets ($thousands), new AC ($thousands). Twice new $2k anti skid control electronics because of wheel sensor shorts. Rust removal and repaint cost twice the Escape at the same body shop same year because they had to cut out and replace both door sills. A maintenance nightmare by comparison.
But a ragtop Beemer is very nice in Fort Lauderdale ‘winter’. Let’s just say when my kids come down to visit, I never get to use it.
Thanks Rud. Maybe I’ve been too skeptical. This begs the question, if hybrids can be justified on their own merits, why do they get a taxpayer subsidy?
The battery is nickel-metal hydride, correct?
Yes.
I heard they are not prone to spontaneous combustion and neurotoxic gas release when in an accident or salt water spray. That’s a plus.
Can never happen. The NiMH electrolyte is potassium hydroxide in water.
Not quite. Nickel Iron is a nickel metal hydride but the metal can be something other than iron. Nickel Iron batteries have been used for over 30 years with just an electrolyte exchange about once every 10 years. They are very long life batteries however they use a lot of water so they must be serviced regularly. Modern batteries use an automatic waterer that monitors the level and adds a little water as needed. They also have more loss when they charge making them more costly to keep charged. They are good for solar off the grid applications as over the long term they are very cheap.
Low energy density is the reason you don’t see them today but they are still being used.
Ford is now flogging its electric Mustang.
Sacrilege!
An abomination.
Just listen to that V8 growl from Steve McQueen’s Mustang in Bullitt.
The body roll of the Charger and Mustang is a sight to behold! Yikes!
I happened to be in the parking lot at the local grocer when somebody started his ICE Mustang, my first thought was “Who would want an EV Mustang and miss that fantastic growl”.
And why would you need a stereo in that ICE Mustang when you can listen to that V8 sing? 😉
I had many Mustang GTs as company
cars. Lots of fun.
Here in SE Michigan I saw many Mustang prototype vehicles on the streets for about six months before i realized I was looking at Mustangs.
I finally remarked to the wife that the taillights reminded me of a Mustang,
She then spotted a Mustang emblem and we agreed it looked like a generic dorkmobile.
The earlier prototypes had no emblems on the vehicles. That pre-production Mustang had a Mustang emblem.
I refuse to run my 2024 dark horse in silent mode. My roommate, if awake always steps outside just to hear me fire up the car.
why is he still CEO?
He might not be for much longer. When Mulally retired in 2014 they promoted Mark Fields, then fired him for Jim Hackett 2017, then fired Hackett for Farley in 2020. Underperformance for a decade. That is usually indicative of serous problems with the BoD.
The US car industry is being overtaken on every front.
It cannot compete on quality with the European manufacturer’s. But that’s not new. It never could. The US car industry competed on cheapness and reliability (consistency of build). That worked for decades.
Then Japan outcompeted the US on reliability.
But the US still had huge scale from its domestic market to keep costs down.
Now we have China. Build Your Nightmare. The US car industry needs a complete overhaul. Or it needs to just give up entirely and switch to retail only, of Chinese brands.
That is why the EV dream is embraced by Ford. The US car industry needs something new – a fresh start as novel as Dreadnoughts were to 19th century navies – or it’s game over.
It’s desperation but it’s rational desperation.
“The losses go far beyond the cost of building and selling those 10,000 cars, according to Ford. Instead the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford.”
I’m no accountant (though I did ace an introductory accounting course)- I thought you’re supposed to depreciate research and development costs and not count them against current production.
You do IF there is a useful program life. If there isn’t, you write them off as incurred. The smart thing here—since there evidently isn’t—would be to just stop.
Research, engineering and testing is an operating expense on an income statement
Internally, costs and income are binned to individual car and truck lines to determine the profitability of each model
R& D for future models not yet for sale gets binned to current models only with the simple equation of total spending this year per vehicle sold this year.
Given that Ford EVs sales in 2023 were about half of what they expected back in 2022, I’d guess the loss per vehicle is at least twice as high as expected. And that is not good news.
When your company is growing a new division, like EVs for Ford, losses are expected as volumes are growing.
Tesla managed to remain unprofitable for 17 years, but by 2022 was the second most profitable (Net Profit Margin) auto company in the world. Ferrari was number one. Musk new how to sell stocks and burn though cash.
Sounds like this: Doctor, it hurts when I do this. The Doctor says: stop doing that, then, and pay the office on the way out. The Ford CEO can’t figure this out?
Waiting on a Ford vehicle I saw a fascinating film on their TV about these old electric attempts. Also steam was once considered as those boats did not have the wind dying problem. I saw somewhere that flying cars may be making a comeback from decades ago. Examples of something called homework and problem solving which are a lost knowledge base. Guess it’s never windy in computerland. Trial and error work fine if you realize the error. It’s not a simulated or virtual world.
I live about 45 minutes from the Ford Oakville Ontario plant, and have relatives that worked there, now retired fortunately for them. Ford shut down production of the useful wanted vehicles they used to make there, in order to retool for a Lincoln EV SUV. They just announced recently that these plans are on hold with no date anytime in the future to activate these plans, and all the workers will remain laid off indefinitely. Huge impact on the local economy as well as these workers. I believe the ratio of workers directly employed at an auto plant to suppliers etc is around 1-7, so however many Ford workers are laid off, there’s another 7 laid off at their suppliers, and probably another dozen at the local restaurant, grocer, retail store etc.
The big problem with flying cars is how to land when everything fails.
Aircraft can glide land. Even a helicopter can land after a total power failure- nose down to spin the rotor, then pull level at the last moment to use the rotor momentum to slow the fall.
Anything which looks like a drone / quad copter, not so much. If you are lucky you might be able to deploy a ballistic parachute, otherwise you are dead.
Wouldn’t the helicopter maneuver work to save a quadcopter car facing power failure?
Since there are 4 or even 6 motors in the car-copter designs I’ve seen, wouldn’t motor problems be less of a issue than in single engine helicopters?
Mr. Layman’s guess.
The blades of a helicopter, even the larger ones with two blades, cover most or all of the area/mass. The rotors can spin in a “freefall” to provide the lift to avoid a devastating impact with the ground. (Think of a maple seed whirling to the ground.)
Do drones or quad copters have the same blade area to make a difference without power to the blades?
I wonder if this Farley is related to those other comedians? Inquiring minds want to know.
So it is said.
Remember Farley’s Follies?
(Farley was postmaster general when he removed some stamp sheets from the printing press before the sheets were perforated and gummed. He then autographed those sheets and gave them to his relatives, which would have become a very valuable rarity had not other stamp collectors raised a ruckus. To prevent a rarity, more of those stamps were printed without perforation or gum.)
What happened to Farley? Nothing! (He was a democrat.)
Take away government tax preferences, subsidies, mandates and all of this EV business goes away. This is 100% a government inspired creation. Get the government out of the auto business now.
You left out “…bullying…”
Yes, but Ford is helping to save the climate, no? Much of the EV pollution is hidden away in China in the Great Sludge Lake…..out of sight….out of climate warmists minds.
It is still so cold everyone has to live in heated houses in the US.
That is just their rare earth processing. Then there is the lithium, and the cobalt, and the nickel…
Farley: Great news, Ford shareholders! We are going to KEEP on producing a product almost no one wants.
Shareholder: Your per unit profit is a NEGATIVE 132K.
F: We’re going to offer the New and Improved model — soon! It will have a per unit profit of (puts hand over his mic) sshjkfmmdblwrrgs.
SH: Of what?
F: Of something …….. less negative!
SH: Apparently, you want to hang the Ford Motor Corporation. That’s your business. You will not be using my money to buy the rope. *sound of typing quickly on computer keyboard*…………………..
And…… there! SOLD. (aside to self: “Phew! I got out of that mess just in time!”)
*****************************
Ford, et al., you are on your way to DOOM. Because, sooner or later it’s going to happen:
YOU WILL RUN OUT OF OTHER PEOPLE’S MONEY.
I think they are expecting Democrat speaker Johnson and the the third Obama term to bail them out.
With OPM, no doubt.
Well, I have news for them:
The odds are on TRUMP (ahead and waaay ahead of the dementia patient) That makes their continuing to make EV’s such a poor risk as to be malfeasance.
Come on, shareholders! File that lawsuit! 🤨
Not sure the “third Obama term” will last into a fourth Obama term in 2025–even CNN is showing Trump leading by 6% vs. Biden.
Too much $$$ went to Ukraine to start bailing out Ford, unless they switch from building EV’s to building tanks.
Or else they could go back to building cars with ICE engines, like Henry Ford did.
Jet Industries produced electric cars in the 70s &’80s. Wikipedia says:
Turn that into a plug-in hybrid and I’d buy it in a New York minute. But that’s not what Ford and others are shooting for. They want a high end hi mileage for high brows to show off how green they are. Electrics are great as urban runabouts. The “Great American Road Trip to Yellowstone” not so much well really not at all.
AS I’ve said before, this is what happens when politicians, academics and bureaucrats are allowed to make decisions on what the general population should be doing. They don’t take proper surveys of what they want to do or buy, but they decide what should be best for them or the environment or anything else they consider they’re experts on. And the manufacturers are largely to blame too because they should have done their own homework on the issue. Instead, they figured that government mandates demanding that only EVs could be sold in the near future plus a few buyers subsidies would create an artificial demand so they jacked up prices hoping to hold consumers to ransom. Except consumers refused to take the bait, and now those high prices, lack of recharging infrastructure, uncertain cruising ranges, reliability ratings well below ICE types and low resale values have come back to bite them. Meanwhile governments themselves are going to be held accountable for using tax dollars to subsidize EV factory construction and battery plants when there’s a limited market for them.
So much for the – “If you build it, they will buy it.” – view on electric vehicles.
“Ford CEO Jim Farley still plans to push forward with his loss making electric vehicle strategy.”. CEOs who run up billion dollar losses don’t usually last long.
Robert Bryce reports slightly different numbers, but it is clear, Ford EV’s are a loser. His figures show that Ford sold a little over 20,000 EV’s, not 10,000 in Q1, so Ford “only” lost $65k on every EV.
https://robertbryce.substack.com/p/ford-lost-65272-for-every-ev-it-sold
Well in Oz the Chinese LDV eT60 battery ute sells for $60k USD equivalent with 10% GST so perhaps Ford should have done a deal with rebadging them and making an earn? Although it is the only battery dual cab ute available in our market to date at twice the price of its diesel sibling and they only sold a single battery one Australia wide in March. The EV fad is over.
That is not the fully accounted loss per vehicle
The number includes investments for future EVs (engineering) and future battery manufacturing plants for EVs not yet available for sale.
Unfortunately, the future looks dim because Ford’s EV sales are about half of what was projected and US BEV sales growth stalled in 1q 2024.
We learned from Germany that ending government subsidies really hurts EV sales. So far it seems “small” $5000 price reductions are nit paying back
In 2022 some Ford EV engineers decided BEVs were worth $10,000 less than an ICE but Ford planned to charge $10,000 more. The conclusion was that the Ford / Biden business plan would bankrupt the company and Ford Motor would become Federal Motor in five years.
As a former Ford employee in product development for 27 years, it is not pleasant watching a company ignoring what their customers want to buy. The small crowd of EV lovers is not growing much — I still can’t figure out why anyone buys a BEV. Reminds me of the Dire Straits song “Money For Nothing”
Dire Straits – Money For Nothing (HQ) (youtube.com)