For Ford, the transition to electric is turning into a nightmare. As its results for the 3rd quarter of 2023 revealed, the blue oval brand lost no less than $36,000 on each electric model during this period.
As we know, the electric automobile market is currently going through a rough patch, caused in particular by a drop in demand worldwide. The situation affects all players in the sector, including its main leaders like Tesla, which has just seen its share price fall by 20% (i.e. a loss of $137 billion).
To limit the damage, some manufacturers have taken drastic measures, like Volkswagen which decided to stop production of the ID.3 at its historic factory in Dresden. The thing was made official when VW had also just announced the elimination of 300 jobs at Zwickau, its main EV production site.
However, we have just learned that the situation is not much better at Ford. Indeed, the American manufacturer has just published its financial results for the 3rd quarter of 2023. The opportunity to see to what extent the transition to electric is turning into a nightmare for the brand with the blue oval.
$36,000 loss on each electric model
Thus, Ford affirms that Model e, its division dedicated to electric vehicles and the mobility of tomorrow, recorded colossal losses of $1.3 billion between July and September 2023. To illustrate the extent of the damage, the American company simply loses $36,000 on every electric model sold. For the manufacturer, this situation is the product of a “continued investment in next-generation electric vehicles and challenging market dynamics.”
Despite everything, it should be noted that Ford EV sales increased over this same period, with 20,962 electric cars sold during the 3rd quarter of 2023. Unsurprisingly, the Mustang Mach-E represents the bulk of sales, at 42 .5%. We also remember that Ford had decided to reduce the price of the electric SUV to respond to Tesla’s aggressive pricing policy.
Delayed investments
However, it is clear that these efforts on prices were not enough to redress the situation : “Many North American customers interested in purchasing an electric car are not willing to pay more than for a thermal model,” said John Lawler, the company’s financial director. Does this mean that Ford will give up on electric? No, but on the other hand, the brand will delay its investments in the field.
Reducing spending on electricity seems to be the only immediate solution for Ford, especially since the manufacturer has just signed a new agreement with the UWA, the main auto workers’ union in the United States. After weeks of strike, Ford has committed to increasing wages by up to 25% over the next 4 years. It will therefore be necessary to find additional resources to honor these commitments. The electric motor should pay the price.
Source: CarBuzz