Go Woke, Go Broke: Ford Announces Mind-Boggling $100,000 Loss on Each EV Sold in 2024

Go Woke, Go Broke: Ford Announces Mind-Boggling $100,000 Loss on Each EV Sold in 2024

https://www.windtaskforce.org/profiles/blogs/go-woke-go-broke-ford-...

 By Anthony Altomari  

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Ford’s attempt to electrify its revenue through EV production has been a swing and a miss.

In response to the decreasing market for EVs, Ford has begun cutting orders from its battery suppliers, according to Bloomberg.

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Even though this changeup could be beneficial in the long run, Ford will not come out of its EV experiment unscathed.

Sources told Bloomberg Ford lost over $100,000 per EV in the first quarter of 2024, more than double its deficit from last year.

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The news comes as the EV market across the country has taken a hit in 2024.

 The Associated Press reported last month, sales of EVs grew only 3.3% during the first quarter of 2024, a sharp decrease from the 47% growth seen last year.

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The EV share of total U.S. sales also fell from 7.6% to 7.15%, year-to-year fourth qtr.

Regular car sales were down as well.

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The declining sales numbers support automakers’ mistake, they  believed their own hype, and moved too fast expanding their EV production, the AP reported.

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Given the state of the EV market, Ford is trying to reinvent its EV strategy.

Ford has decided to reduce its spending on battery-powered models by $12 billion, Bloomberg reported.

Ford’s has already forecast it will lose up to $5.5 billion from EVs alone this year.

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Bloomberg reported, Ford CEO Jim Farley recently said, Ford’s EV division, known as Model e, “is the main drag on the whole company right now.”

"The company has taken several measures to try and remain competitive with the EV market king, Tesla.

“We’ve seen prices coming down quite dramatically and that’s why we haven’t been able to keep up from a cost reduction standpoint,” Ford’s CFO John Lawler told analysts April 24 on the company’s earnings call, according to Bloomberg.

“But we’re targeting to take out as much cost this year as we can on Model e"

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Ford’s shifted its focus toward producing smaller, more affordable EVs.

The company is fast-tracking to release new EV models it expects to debut in 2026.

The models will reportedly start at $25,000.

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Farley said, he expects these new EVs will be able to turn a profit in their first year, according to Bloomberg.

If all goes to plan, the price-cutting move could serve to make Ford one of the biggest players in the EV market.

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Despite the optimism for the future, Ford’s present serves as a cautionary tale of the pitfalls of trying to jump the market.

When Ford announced two years ago that it was splitting its business into two divisions, with the Model e division focusing on EVs, and the Ford True Blue division focusing on traditional internal combustion vehicles, the company envisioned that it was on the verge of something great.

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“Ford Model e will be Ford’s center of innovation and growth, a team of the world’s best software, electrical and automotive talent turned loose to create truly incredible electric vehicles and digital experiences for new generations of Ford customers,” Farley said in a March 2, 2022, news release.

Whether Ford was trying to win over the climate-conscious crowd, or executives thought it was truly in company’s best interest, the Model e experiment has been a failure thus far.

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Simply put, the EV demand simply isn’t enough for traditional automakers to justify shifting their production from gasoline to electric.

And, up until the recent decision to cut prices, Ford’s EV offerings have been quite pricey.  Ford’s website lists its electric version of the classic Mustang, the Mach-E, starting at just under $40,000.

The cheapest version of its electric pickup truck, the F-150 Lighting, starts at a whopping $62,995, according to Ford’s website. By comparison, a traditional F-150 starts at just under $37,000.

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It’s not just the price that EV purchasers have to stress over. 

The batteries also cause issues, given their size and weight.

The heavier the batteries are, the more quickly they’ll wear the car, especially the brakes and tires, resulting in more frequent mechanical problems.

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With the following list, it should be no surprise at all, the EV market has not taken over like some dreamy folks, including Ford top management, were hoping for. 

1) High insurance costs at 3 times gasoline, and

2) High tire costs 2 times gasoline, and

3) Increased risk of mechanical issues, and

4) A world set up for gas-powered vehicles, and

5) Short range, which gets even shorter during cold and hot temperatures, and/or with one or two passengers

6) Extremely low trade-in values for used EVs, 

7) High monthly payments due to high prices of EVs and high interest rates,

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Lifetime miles of a gasoline vehicle is about 12.5 years x 12,500 miles/y = 156,250

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Lifetime miles of an EV is about 8 years x 9,000 miles/y = 72,000 miles, at which point you need a new battery for at least $15,000 in an 8-y-old car, i.e., you have to be nuts to do that

Many comparative studies assume equal miles for gasoline and EV, which is totally bogus, and the eco-folks performing the studies know full well they are "stacking the deck".

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For now, electric vehicles just cannot compete with their gasoline vehicles, especially, for companies, such as Ford, to justify shifting so much capital to EV production.

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No matter how much enviros jump up and down to get rid of gas-powered vehicles, this news from Ford shows gasoline cars are not going anywhere anytime soon.

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Which brings back the question: What was Ford’s rationale behind devoting half of its company to EV production? Plain old stupidity? What were they thinking?

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If Ford thought the EV market was going to take off in just a few years, and envisioned that most of its sales would be generated by EVs, it made a serious judgment error.

Ford should definitely go back to the drawing board when it comes to EV production strategy.

Drastic change is needed, such as hrowing out some of the top management.

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But if this was not a business decision, but rather one that had a political foundation, it shows how costly a mistake it can be when businesses focus on anything other than, well, the bottom line

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This surely is not the end of Ford’s EV production, (the company has more money to waste)

Ford may, or may not, find ways to slowly emerge from this failure.

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But next time Ford makes a decision that could cost its company billions of dollars, hopefully, the "better idea"  light bulbs light up first.