According to company data, Ford sold a total of 20,223 electric vehicles in the first quarter. This translates to a loss of over $65,000 per vehicle. In 2023, the Model e segment had already incurred a net loss of $4.7 billion. The electric vehicle sales included 9,589 Mustang Mach-E SUVs, 7,743 F-150 Lightning trucks, and 2,891 Ford E-Transit electric vans.
Ford attributed the decline in revenue for the Model e segment to a decrease in wholesales and the ongoing pricing pressure affecting electric vehicles in the market. The company expects the costs of electric vehicles to improve in the future, but they anticipate this improvement to be offset by top-line pressure.
During the earnings call, Ford's CFO, John Lawler, stated that they anticipate Model e to incur losses of approximately $5 billion this year due to continued pricing pressure and investments in new vehicles. Ford's CEO, Jim Farley, acknowledged that the company needs to make significant progress in the Model e department, as it is not only affecting Ford but the entire industry. He expressed their commitment to building a sustainable and profitable electric vehicle business with long-term value.
And it is crucial that the cost of capital is not subsidized, as I previously mentioned. The real game-changer for us is not just the flat costs in Model e this year, but more importantly, the profitability of our upcoming cycle of products," he emphasized.
"I am incredibly proud of our team's efforts in adjusting our capital spending and ensuring that all our future EVs are profitable."
In February, Mr. Lawler revealed that Ford had reduced its investments in EVs due to the significant losses incurred by Model e. The company postponed its second joint venture battery plant, downsized its lithium iron phosphate (LFP) plant in Michigan, and withdrew from a JV battery plant in Turkey.
Ford has no intentions of launching Gen 2 EV vehicles "unless we can achieve profitability and a return on the capital we are investing, considering the current pricing environment," he stated.
For every Ford Lightning EV sold, "we can sell 12 ICE vehicles," Mr. Lawler highlighted. This discrepancy holds true when comparing the Mach-E EV to ICE vehicles as well.
Ford is facing increasing losses due to a recent Gallup poll revealing a decline in American interest in electric vehicles. The percentage of Americans seriously considering purchasing an EV dropped from 12 percent in 2023 to 9 percent this year. Additionally, those who might consider buying an EV in the future decreased from 43 percent to 35 percent, while those who would not buy an EV increased from 41 percent to 48 percent.
Automaker expectations for EV sales have also slowed down. A survey conducted by KPMG in January, which included 1,000 auto executives from 30 nations, showed a decrease in confidence in electric vehicles among automakers in the United States and other countries. The share of executives expressing extreme confidence in profitability dropped from 48 percent in 2022 to 43 percent in 2023 in the United States.
The report highlighted that while executives were previously enthusiastic about revolutionizing the industry with new car models, they are now more cautious about the challenges of managing the transition and maintaining profits.
Despite the declining interest in EVs among Americans, the Biden administration continues to advocate for policies promoting the shift to electric vehicles. Last month, the U.S. Environmental Protection Agency (EPA) finalized stringent pollution standards for cars to accelerate the adoption of cleaner vehicle technologies. However, a coalition of 5,000 U.S. car dealerships criticized these standards, citing consumer concerns about affordability, charging infrastructure, performance in cold weather, and resale value as reasons for the lack of interest in EVs.
Worse still, the regulations spike in 2031–32 and revert to the unrealistic mandate that essentially requires that two-thirds of all vehicles sold be electric.”
They argued that the EV mandate isn't the end result of an “open congressional debate.” instead, “that is unelected Washington bureaucrats dictating what kind of vehicles americans can buy.”