Ford’s electric vehicle segment continued its losing streak in the first quarter of 2024, netting a loss of more than $1.3 billion while its gas cars reported a profit.
Ford reports its earnings from three segments—Ford Model e, which covers the company’s electric vehicles (EVs); Ford Blue, which relates to the firm’s gas and hybrid vehicles; and Ford Pro, which deals with the commercial segment. On Wednesday, Ford revealed that its Model e segment registered $1.32 billion in losses for the first quarter of 2024.
The other two segments reported profits, with Blue netting $905 million and Pro bringing in $3 billion. As such, Ford’s electric vehicle department was the only segment to report losses in first quarter 2024.
The 20,223 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 Model e revenue was down, as wholesales declined and significant industrywide pricing pressure continued to affect electric vehicles currently on the market,” the firm said in its earnings release. “The company expects EV costs to improve going forward, but be offset by top-line pressure.”
“In the meantime, availability of reliable DC fast-charging is more than doubling for Ford EV customers in the U.S. and Canada, as they begin to receive adapters that provide access to more than 15,000 Tesla Superchargers.”
During the company’s earnings call, John Lawler, Ford’s chief financial officer, said that the company expects Model e to suffer losses of around $5 billion this year “driven by continued pricing pressure and investments in new vehicles.”
Ford CEO Jim Farley admitted that the company needs to make “tremendous progress” on Model e as the department is a “huge drag, not just on Ford, but on our whole industry.” He said Ford was “going to build a sustainably profitable EV business with terminal value.”
“And it needs to return the cost of capital on its own and not be subsidized, as I mentioned. And the real turning point for us, not only is our flat costs in Model e this year, but most importantly, it'll be the profitability in our next cycle of products,” he stated.
“And I’m proud of the work that our team has done to make the adjustments in our capital spending and to make sure that all of our next EVs are profitable.”
Back in February, Mr. Lawler said that Ford scaled down its EV investments given the large losses faced by Model e. The company delayed its second joint venture (JV) battery plant, cut down the size of its lithium iron phosphate (LFP) plant in Michigan, and backed out from a JV battery plant in Turkey.
Ford does not plan on launching Gen 2 EV vehicles “unless we can get to a profit and a return on that capital that we’re investing there at the pricing environment that we now understand is reality,” he said.
For every Ford Lightning EV the company sells, “we can sell 12 ICE [internal combustion engine] vehicles,” Mr. Lawler pointed out. The disparity remained true when comparing the Mach-E EV and ICE vehicles as well.
Falling American EV Interest
Ford’s mounting losses come as a recent poll by Gallup found that fewer Americans were interested in electric vehicles. The percentage of Americans “seriously considering” buying an EV was found to have fallen from 12 percent in 2023 to 9 this year.During this period, Americans who “might consider” buying an EV in the future dipped from 43 percent to 35 percent. Meanwhile, those who said they “would not buy” an EV rose from 41 percent to 48 percent.
Automaker expectations of EV sales have slowed down as well. A January survey published by KPMG that polled 1,000 auto executives from 30 nations found that confidence in electric vehicles among automakers in the United States and other countries had dipped as many were concerned that their large bets on EVs may take longer to pay off.
The share of executives saying they were “extremely confident” about profitability dropped to 43 percent in 2023 from 48 percent in 2022 in the United States.
“Just a year ago, executives were excited about the prospects for transforming the industry with new kinds of cars. Now, they remain optimistic, but they are more sober about how difficult it will be to manage the transition and preserve or increase profits,” the report stated.
Despite declining interest among Americans, the Biden administration continues to push policies promoting a transition to electric vehicles.
Last month, the U.S. Environmental Protection Agency (EPA) finalized the “strongest-ever pollution standards” for cars that accelerate the “adoption of cleaner vehicle technologies.”
A coalition of 5,000 U.S. car dealerships criticized the EPA standards, noting that the regulations require a bump in EV sales “that is far beyond the consumer interest we are experiencing at our dealerships.”
“Despite generous government, manufacturer, and dealer incentives, our customers continue to bypass EVs over concerns about affordability, charging infrastructure, performance in cold weather, and resale value,” the coalition stated.
“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 is not the result of an “open congressional debate.” Instead, “this is unelected Washington bureaucrats dictating what kind of vehicles Americans can buy.”
