Ford announced this Thursday that for every electric vehicle (EV) sold in 2024 it will lose $132,000. This has contributed to economic losses in the first quarter of this year already accounting for $1.3 billion. This is in addition to the $4.7 billion of total losses in 2023 due to electric cars.
The main problem for Ford comes from the production costs of electric units. The market has become increasingly competitive, especially since products from China have been incorporated into the chain and the company has to compete against low cost Chinese models.
Production costs skyrocketed in 2023 as a result of the driver crisis and inflation. For example, Ford’s F150 Lightning electric truck cost just over $39,000 in May 2021, but closed 2022 at $56,000. The price increase leaves the Biden administration’s $7,500 federal electric vehicle tax credit, offered as part of last year’s Inflation Reduction Act, as a relatively insignificant incentive for consumers.
Ford's electric vehicle division sold 10,000 cars during the first three months of 2024, which is 20% less than last year. With this, revenue fell by 84%, which Ford attributed primarily to sales price reductions for EVs. The result cost the company $1.3 billion in losses before interest and taxes (EBIT).
Despite the massive losses, the company's leadership doesn’t plan on giving up on the electric market. According to CNN, Ford CEO Jim Farley said in a call with investors that the company is making changes in its electric vehicle business, and that the next generation of electric vehicles planned by the company will allow it to be profitable in the future.
Jim Farley's message to his investors had a positive effect, at least for now. Despite the large losses declared this Wednesday, Ford Motor Company is going well on the stock market so far this year. In the last five days, it rose 7.2%. The forecast for the rest of this day is that it will close positively.
