Ford loses $100,000 on every electric vehicle it produces

During the first half of Joseph Biden’s presidency, which promised US citizens to fight inflation through subsidies for the purchase of electric vehicles, Ford Motor Company enthusiastically began converting its product range to electric traction. Now, it is rumored to be losing $100,000 on every electric vehicle it produces.

Image source: Ford Motor

This was reported by Bloomberg, citing its own anonymous sources. According to them, in the first quarter of last year, Ford suffered losses of $50,000 for each electric vehicle produced, and a year later they doubled to $100,000. If things continue like this, Bloomberg predicts, then by the end of the current year, losses from the production of electric vehicles will be almost entirely level out profits from the production of Ford cars with internal combustion engines.

During an April meeting with analysts, Ford management explained that the company has not kept pace with reducing costs in proportion to falling prices for electric vehicles. At the same time, the company promised to do everything possible to minimize costs in the business of producing electric vehicles by the end of the current year. As one of the options for overcoming the crisis, it is proposed to produce affordable small-sized electric vehicles in the price range of $25,000, which will enter the market in 2026 and will be able to ensure profit from their sales in the second year of sales. Ford management is striving to bring the company’s electric vehicle division to self-sufficiency so as not to depend on the classic business of producing cars with internal combustion engines.

As Bloomberg reports, Ford is reducing the purchase of traction batteries from its suppliers, which include SK On and LG Energy Solution, as well as China’s CATL. In the electric vehicle segment, Ford expects to face losses of $5.5 billion by the end of the year, but seeks to reduce core expenses by $12 billion. As a result, new electric vehicle models will be released less frequently, the pace of construction of new enterprises will be reduced, and the company will also have to reduce prices for its products in this segment. Representatives of the three battery suppliers mentioned told Bloomberg that their contracts with Ford continue to be fulfilled, although they would not comment on possible changes to their terms.