Ford’s Electric Vehicle Unit Lost $722 million in Q1 2023
The company could lose $3 billion from EV sales to consumers this year
The only thing about green energy that might be truly green is the river of cash the technology is bleeding.
Ford Motor Company recently released its first-quarter earnings of the year. The results were mostly good…except for its electric vehicle unit.
Ford (F) reported first quarter revenue and earnings that topped Wall Street expectations on Tuesday while also breaking out results for its EV segment for the first time, where losses totaled more than $700 million in Q1.
Revenue came in at $41.5 billion for the quarter, up 20% from last year and beating expectations for $36.1 billion. Earnings per share came in at $0.63, more than the $0.41 expected by analysts. Last year, Ford reported a net loss of $3.1 billion during its first quarter due to losses related to its investment in EV maker Rivian (RIVN).
In a separate release on Tuesday, Ford announced it would be re-opening orders for its all-electric Mustang Mach-E on Wednesday with prices lowered by up to $4,000 for some models.
Ford stock was down about 1% in after-hours trading following these results.
Ford sells it's EV's for approximately $50,000 each, but their cost is $110,000! I'm no accountant, but that seems unsustainable.
— Steve Smith (@SteveSm50389024) May 3, 2023
The projections for 2023 for its electric vehicle unit point to potential losses of $3 billion.
But the company expects to be making money soon!
Ford (F) said it will lose $3 billion on its sales of electric vehicles to consumers this year, but it still expects to hit the profit targets it set for this year of between $9 billion and $11 billion.
Ford said those EV losses and the overall profit both come before expenses from interest and taxes. The $3 billion loss is roughly equal to what it lost on EVs on that basis the last two years combined. It said it lost about $900 million in 2021 and $2.1 billion in 2022. It’s the first time it gave a breakout of the results from its EV operations.
But it said it still expects EVs to start making money soon, going from a 40% operating loss margin last year, when it sold about 96,000 EVs, bringing in $5.3 billion in revenue, to about an 8% profit margin by the end of 2026. It expects increased production of EVs to bring global product of those vehicles to a 2 million annual rate by the end of that year.
Interestingly, price drops to be competitive among competitors have also fit into Tesla’s profit margins, dropping by 24 percent. Additionally, there are signs that the demand for EV’s is softening.
Early in the quarter Tesla reduced US prices on many of its models, then did it a second time early in March. The company slashed US prices two more times in April, including overnight Wednesday, in an effort to boost demand. It trimmed them in Europe as well.
The net income drop came even though Tesla’s sales last quarter rose 36% to a record 422,875 vehicles worldwide. That’s largely because the average sale price per vehicle fell just over $5,000 from the first quarter of 2022 due to the price cuts. Analysts estimated that the average Tesla sold for $46,850 last quarter, down from $52,100 a year earlier.
The company produced nearly 18,000 more vehicles than it sold during the quarter, indicating softening demand.
A problem contributing to the profitability challenge is related to the component parts of the batteries that store the electrical energy in those cars. The price of materials soared in 2022.
The volume-weighted average for lithium-ion battery pack prices reached $151/kwh this year, a 7% increase over 2021, according to the report. It marks the first time average pack prices have increased since BNEF began tracking prices in 2010—and delays EV price parity with internal-combustion vehicles.
That figure represents an average across multiple battery end uses, including different types of electric vehicles, buses, and stationary energy storage, BNEF noted, adding that the specific average for EV packs was $138/kwh in 2022.
Average prices could have been even higher in 2022 if not for increased adoption of the lower-cost lithium iron phosphate (LFP) chemistry as an alternative to the nickel manganese cobalt (NMC) used by many manufacturers. On average, LFP battery cells were 20% cheaper than NMC cells, in part because they don’t require cobalt, one of the raw materials that saw significant prices increases in 2022, according to BNEF.
With more regulations for more and more people into electrical vehicles of all kinds and environmental activism limiting American mining operations, the price for component parts is unlikely to decrease anytime soon.
If we could only capture the energy behind virtue signaling, the US would be energy independent within a month.
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Comments
EVS are such a wonderful business model that even with tons of government subsidies they still lost three quarters of a billion dollars. What a bunch of f****** Financial geniuses
On point. They aren’t taking the loss, we are.
“Ford sells it’s EV’s for approximately $50,000 each,
but their cost is $110,000! I’m no accountant, but that seems unsustainable.”
Fool knows nothing about big business. They’ll just “make it up in volume.”
These EV manufacturers will all be coming for bailouts. They were only “following orders” from the Biden Admin.
When you “sell” a product at a loss, far more accurate to call it a “transfer”, and account the transaction under marketing, not sales.
They’ll make up for the losses in volume.
The sad thing is that they think that idea actually works.
Cow farts aren’t pollution if you capture them as fuel.
Very interesting technology emerging mostly out of Toyota, for non-commercial, hydrogen powered vehincles. Methane — cow farts — tech has been around for a while.
My back of the envelope says hydrogen and generated methane are the sweet-spot vehicles for point of use and mobile power. Develped and at scale this wins on efficiency. availability. cost. robustness of delivery, machinery life and resiliance, and yes, environmental impact. And transition, actually.
The impediments with generated hydrogen n methane are all engineering problems. The physics, n fixed chemistry works out. This is exactly the opposite of the current “green” generation, grid uber alles, central-gen electric thrust off the enviro-weenies; some tech in hand, implementing physics that doesn’t work for the target uses.
Hey, we’ve got new, better power technology so good you can’t bet a sear on your steak any more. (No gas stoves for you, for the peole who don’t cook.) I’ll believe they care about quality of life when they talk about how crunchy-delicious cricket bits are.
I, myself, do not consider a substitute “good enough” they can force it on me, but not them, to be a ringing endorsement. I’ll consider their “alternatives” after they go first.
They aren’t even watermellons any more — green on the outside; red-as-in-communist on the inside. They’re totalitarian statists first, tagging back to “green” when pushed hard enough.
Why the hell would you want big wind-farm “power” generated at low yield and inverse to consumption demand cycles, using machinery massively poisonous to construct, pushed through a grid, also poisonous and destructive to construct, at roughly 50% losses, run through electric motors? Why would you push all the damage, costs, and limitations of the electric grid into point of use, and mobile power needs?
The only way to get their sales up is to hire Dylan Mulvaney to be their spokesperson.
Picture the ad:
Dylan Mulvaney, and the Navy T*anny recruiter driving down the road in a Ford EV, drinking Bud Light. A match made in . . . DC.
Subotai Bahadur
I’d laugh but they’re probably filming it as we speak.
While it burns uncontrollably.
Then they’ll have free cars to give away to their employees.
People prefer the versatility, affordability, reliability, and environmental impact of ICE vehicles. Go green, emit.
I’m shocked.
Hard to have support to a company that has more jobs in China, Canada and Mexico than the USA.
This industry seems without a good outlook, heading into a recession with high interest costs. Ford stock hit $1 in the 2007-2009 collapse. IMO if the bank crisis continues and we have a real recession, they could be losing $5B a year on EV’s and the stock selling a lot lower. In hard times, EVs are a luxury purchase not mainstream.
In hard times all new cars are luxury purchases. Evie’s just happened to be more expensive on the average. But the market so screwed up that even used cars aren’t affordable for most people anymore. If a smart person would be to be running a car company right about now they’d figure out a way to build an affordable car that gets really good gas mileage for under $10,000. But they’re not interested in that lowball stuff anymore
You can’t. You have to start at “small truck” to evade all the unreasonable, profit-sucking EPA/DOT “fuel efficiency standards.” You can either sell a truck at a reasonable truck price, or you can sell a small car at a reasonable truck price. America has already made that choice, and the small car loses.
I love my 2oo7 carbonation Ford GT V freaking 8 Mustang more and more.
That was a slight misspelling. But I was like it’ll work
I sold it. Getting a Corvette
You aren’t the first Mustang owner I’ve talked to that is switching brands behind the Mach E nonsense (I don’t know if that is your reason or not.). I’m not quite ready to trade my GTCS ‘vert in for a Camaro, but if they would have made the Challenger in a convertible…
“Ford loses $60,000 on each sale …”
This is green energy in a nutshell. Now scale this up to trillions of green new deal spending in every sector. Because that’s what Democrats are doing.
“How did I go bankrupt? Two ways, Gradually, then suddenly.”
– Ernest Hemingway
You couldn’t pay me to be chained by an EV.
I will learn how to build my own car before I kowtow to that nonsense.
We’re going to ride horses and travel in buggies. Big piles of horse doo-doo in the streets everywhere. Progress!
Truck-equivalent horses are expensive. Believe me, I know.
Democrats are closely studying episodes of The Flintstones. “How do we make a car like that?”
GOOD!!!!
#notamustang
This is another example of how command economies always fail. Someone decides what’s best to the citizens and then trying to force the consumers to buy it never works. There is no advantage in driving an electric vehicle so most consumers reject them.
When the number one seller of EVs in the world cuts their prices, you know what’s coming. Tesla has cut their prices twice in the last year and that means only one thing to any person with common sense, the market is slowing. They can build their cars way below other manufacturers’ costs because of their frame molding machines that make the entire frame and substructures in huge pieces instead of many smaller pieces. If they can’t make a profit, the big three sure as hell can’t. This EV craze is followed by no natural gas and vegan crazes. I personally am waiting for the no-breathing craze to end it all.
We could get there easily, just by making Tide Pods about 20% larger.
We have two Hyundais, both of them very dependable and paid for. All this chatter about glorified golf carts is of no interest in our home.
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