Ford’s Electric Vehicle Segment Struggles to Turn a Profit Amid Intense Competition
Ford’s electric vehicle segment faced significant losses in the first quarter, with a loss of 1.3 billion USD, or 132,000 USD per car sold. Despite selling 10,000 electric vehicles in the quarter, a 20% decrease from the previous year, revenue from this segment decreased by 84% to just 100 million USD. John Lawler, Ford’s CFO, attributed the losses to an ongoing price war among electric vehicle manufacturers and highlighted how challenging it has been to achieve profits in this sector.
Ford CEO Jim Farley stated that the company is making changes to potentially achieve profitability with the next generation of cars in the electric vehicle segment. However, like other traditional car manufacturers, Ford is transitioning away from gasoline cars and towards electric vehicles. In fact, Ford is the only car company to release specific results for its electric vehicle segment. Last year, the Model e segment incurred a loss of 4.7 billion USD and saw 116,000 units sold.
While not all electric vehicles sold by Ford fall under the Model e segment, Ford Pro handles high-volume sales to business and government customers. The demand for electric vehicles in this segment is substantial, with recent orders for models like the E-Transit and F-150 Lightning showing promise. Despite focusing on gasoline cars for more than double pre-tax profit last quarter (with an increase in revenue and units sold), Ford Pro has seen significant growth in its electric vehicle sales as well.
On the other hand, Ford Blue (which sells gasoline cars to consumers) experienced a decline in revenue and units sold along with a profit of 905 million USD last quarter. General Motors and Stellantis have reported positive business results in their respective electric vehicle segments (General Motors’ Cruise autonomous driving platform and Stellantis’ battery cell manufacturing joint venture), indicating varying success across industry players. Tesla also reported a decline in profits and revenue during this period as it continues to face challenges due to increased competition from new entrants into the market.
In conclusion, while there are both opportunities and challenges facing companies transitioning towards electric vehicles (EVs), it seems that achieving profitability may be more difficult than initially anticipated due to intense competition from both established players like Tesla as well as new entrants into the market such as General Motors’ Cruise autonomous driving platform and Stellantis’ battery cell manufacturing joint venture.
