The ugly EV news from Ford Motor Company just keeps coming. This afternoon, the company reported that it lost $1.224 billion in its EV business during the third quarter. In early October, the company reported EV sales “were up 14.8 percent on best-ever sales of 20,962 vehicles.”
Thus, simple division shows that the storied automaker lost $58,391 for each EV it sold during the quarter.
The company’s losses on its EV business, known as “Model e”, for the first nine months of 2024 total $3.7 billion.
For reference, that $3.7 billion loss is equal to the gross profit (Ford calls it EBIT, short for earnings before interest and taxes) it made on Ford Blue, the division that makes internal combustion vehicles.
Alas, these results aren’t surprising. Ford has been hemorrhaging cash on EVs for the past two years. It lost $4.7 billion on EVs in 2023 and $2.2 billion on EVs in 2022.
The third-quarter numbers simply show, yet again, that Ford’s leadership has made a colossal blunder. CEO Jim Farley and his lieutenants didn’t understand what motorists wanted to buy.
That’s a bad thing if you’re running one of the world’s biggest car makers.
FoMoCo’s third-quarter losses are being made public just two months after the company announced it was killing a planned three-row, all-electric SUV.
In August, the company said, “With pricing and margin compression, we’ve decided to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT within the first 12 months of launch for all new models.”
In other words, Ford was warning two months ago that it was having to slash prices on its EVs and that the third quarter would be a stinker. And it was.
Also in August, the company said it was going to move some of its battery production out of foreign factories into US locations so it could qualify for more federal subsidies available under the Inflation Reduction Act.
As I reported here last year, Ford and other automakers are aiming to collect tens of billions of dollars via the 45X tax credit in the IRA for making batteries in the US.
For instance, Ford is building a battery plant in Marshall, Michigan, which is expected to create about 4,200 jobs. According to Good Jobs First, each job at the new Ford plant will cost taxpayers $3.4 million.
While Ford can claim its sales have increased, the fundamental problems in the EV market have not changed.
As seen above, the credit rating agency Morningstar, which 13 months ago was forecasting huge growth in EVs, has now turned negative on the sector.
In an October 21 report titled, “Are Electric Vehicles Short-Circuiting? Auto Manufacturers Revise Electrification Strategies After Slowing Demand,” (registration required) Morningstar said the major automakers, including VW, Ford, GM, and Mercedes, have delayed their EV plans or slashed planned output due to weak sales.
Morningstar noted that while some automakers, including Ford, have cut prices, which has hurt their profitability. It also says that with EV sales “to early adopters now seemingly exhausted, EVs are struggling to maintain ongoing sales momentum among mainstream consumers.”
Morningstar then listed the issues that have plagued EVs for decades:
EV ranges remain significantly affected by extreme weather conditions, with cold weather (i.e., below 40 degrees Fahrenheit) potentially decreasing range by about 25%). Concerns about the EV charging infrastructure are exacerbated by lackluster reliability records of public EV charging stations. Moreover, charging times, notwithstanding significant developments in recent years, remain considerably longer than the typical time it takes to refuel a conventional ICE vehicle.
Additionally, while EVs have fewer parts than ICE models and typically require less maintenance than ICE vehicles, one-off repairs (notably involving the EV battery pack) can prove inordinately expensive. Accordingly, across most jurisdictions, insurance premiums for EVs are typically higher than for comparable ICE vehicles, mainly because of the potentially markedly higher repair costs. (Emphasis added.)
That paragraph pretty well sums up the EV marketplace, particularly regarding cold weather, charging infrastructure, and charging times. (See this story on Hertz for more on the repair cost issue.) All those problems have been evident since the days of Edison.
So why didn’t Ford and the other automakers see this debacle coming? Was it herd mentality? Were they responding to government pressure? If so, why didn’t they push back? What did they know about EV demand from their market research?
Here’s my prediction: A few years from now, after the automakers have lost billions more due to their misplaced bets on EVs, business schools and analysts will be asking the same questions.
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“So why didn’t Ford and the other automakers see this debacle coming?”
I wonder if the EA might have had something to do with it. What was that ‘old’ saying, “You can’t fight City Hall”.
Well darn – “EPA” of course…..
Going totally EV over a false threat is a Disaster in the making all over a False Threat
I don’t see Toyota mentioned in this post.
Why have they gotten it right and avoided the ignominy of the losers? Toyota has the class not to gloat, that’s Japanese culture.
The Big Three plus the European car builders should explain their collective brain-cramps, but they won’t.
No, they don’t gloat. But Chairman Toyoda said that pure EVs were not the solution and that Toyota would focus on Hybrids and Plug-in Hybrids. For city use where there is a desire to reduce the pollution (not CO2 which isn’t a pollution) that causes ozone and brown clouds (like we get in the Denver area) Plug-in Hybrids provide that while also acting as a standard Hybrid car (greater gas mileage) when taking longer trips outside the city. And given the batteries are smaller, needing much lower range using the EV capability, the costs are lower than a full EV.