Ford has reported significant losses on its electric vehicles (EVs) in the first quarter of this year, with an EV unit loss of $1.3 billion, equating to $132,000 for each of the 10,000 EVs sold during that period. Despite this, Ford is promising lower-priced models in the future. The automaker attributed the decline in revenue to industry-wide EV price cuts.
Ford CEO Jim Farley predicted an EV price war in 2022, but the company was not adequately prepared for it. The CFO, John Lawler, mentioned that Ford has reduced costs by $5,000 for the Mustang Mach-E crossover. However, the drop in revenue is outpacing the cost reductions. Ford has been making incremental changes to the Mach-E to lower manufacturing costs and has reduced prices, but it still needs to recuperate the millions invested in next-generation EV development.
Plans for the next-generation EVs are focused on balancing profitability and affordability, with a delay in the release of a more expensive electric pickup truck and a three-row SUV following the F-150 Lightning. Farley believes that cost parity with internal-combustion vehicles may not be achieved until 2030, but the construction of an LFP battery plant in Michigan could potentially accelerate this process. The introduction of higher-volume electric models beyond the Mach-E and Lightning could also help improve EV profitability.
### Lower EV Prices Promised Despite Significant Losses
Ford reported a $1.3 billion loss on its EV unit in the first quarter, with $132,000 lost per EV sold. Despite this, the company is working towards offering lower-priced EV models in the future.
### Challenges in Cost Reduction and Revenue
The automaker has been struggling to keep up with the industry’s EV price cuts, with revenue down 84% due to the decline in sales. Cost reductions on models like the Mach-E are slower than the drop in revenue, posing a challenge for Ford.
### Delayed Release of Next-Generation EVs
Ford has delayed the release of a more expensive electric pickup truck and a three-row SUV following the F-150 Lightning. The company is focusing on developing next-generation EVs that prioritize profitability and lower prices.
### Cost Parity with Internal-Combustion Vehicles Delayed
Ford’s CEO believes that achieving cost parity with internal-combustion vehicles may not happen until 2030. The construction of an LFP battery plant in Michigan is seen as a key factor in accelerating the affordability of EVs.
### Future Outlook for Ford’s EV Strategy
The arrival of higher-volume electric models beyond the Mach-E and Lightning could help improve Ford’s EV profitability. The company is working towards lowering manufacturing costs and offering lower-priced options to compete in the growing EV market.