No one said the electric transition would be easy or inexpensive. Ford’s first-quarter results for 2024 show significant losses at its Model e electric division.
The company has two other divisions, Ford Pro, which groups together commercial vehicles, and Ford Blue, its banner for gasoline-powered models.
All told, Ford still reports a net profit of $1.3 billion for the first three months of 2024. That profit comes largely thanks to the Ford Pro division, which brought in $3.0 billion. The Ford Blue division made a profit of $1.0 billion.
The problem is the $1.3 billion in losses over at the Model e electric division, which is double losses incurred in the first quarter of 2023. Ford says pricing pressure across the industry is partly responsible for this reality.
As the company sold some 10,000 electric vehicles in the first three months of the year, the math is simple. Ford currently loses $130,000 USD per EV sold, when all costs are tallied. This is before taking into account any interest or taxes that may enter into the calculation.
In comparison, each vehicle sold by the Ford Pro division brought in $7300 USD, with 400,000 sales tallied. Vehicles still equipped with a combustion engine brought in profits of $1400 USD per unit sold, with around 600,000 sales recorded.
For the Model e division, sales were announced at around $100 million in Q1 2024, which is down by 84 percent compared to the same period last year (overall sales for Ford are down 20 percent). Once again, price pressure is partly to blame.
Electric models continue to arrive on the market in large numbers, which will continue to put downward pressure on prices. Ford can't really afford to keep cutting them to stay competitive.
Headwinds notwithstanding, the automaker is continuing to invest in the next generation of electric vehicles it plans. This means that some of the current losses can be seen as an investment towards a future of profitability.
Fortunately for Ford, in the short term, it has other profitable divisions.