Ford is facing challenges in the electric vehicle (EV) market, as recent reports indicate that they are losing approximately $36,000 on each EV they sell. Following a challenging third quarter, the company announced a reduction in its EV investments. During this period, Ford’s Model e division, which focuses on electric vehicles and future mobility, reported losses of $1.3 billion between July and September 2023. These losses are attributed to continued investments in next-generation EVs and the complex dynamics of the EV market.
Despite the financial difficulties, Ford experienced an increase in EV sales during the third quarter, with 20,962 electric cars sold. Notably, the Mustang Mach-E saw a substantial sales boost of 42.5%, totaling 14,824 units. However, sales of the F-150 Lightning, Ford’s electric truck, declined. The company reduced production of the F-150 Lightning but cited other issues as the primary reason for this decision.
Ford’s Chief Financial Officer, John Lawler, remains optimistic about the company’s position in the EV market. He emphasized that Ford can balance the production of gas, hybrid, and electric vehicles to match the pace of EV adoption. This approach is beneficial for customers who can access the products they desire and is also strategically advantageous because disciplined capital allocation ensures profitability and cash flow.
To stay competitive with other automakers, Ford reduced the pricing of the Mustang Mach-E and increased its production. Despite these efforts, Ford found that many North American customers interested in buying EVs were unwilling to pay premiums for them compared to gas or hybrid vehicles. This issue highlights the challenges automakers face in convincing consumers to embrace EVs in large numbers.
It’s worth noting that Ford is not alone in its struggles to sell new electric vehicles. The EV market is competitive, and price sensitivity among consumers is a significant factor influencing sales. Despite these challenges, Lawler remains confident in the growth of the electric vehicle segment, emphasizing that it is indeed growing, albeit at a slower pace than initially anticipated.
Ford does not plan to cancel its second-generation electric vehicle lineup, which includes a pickup truck and a three-row family vehicle. However, the company has acknowledged that there will be investment delays, as the reduced demand for EVs necessitates less immediate capacity expansion. The timeline for these investment delays remains uncertain.
