The recent release of Ford's second-quarter financial results for 2023 provided fresh information about the company's electrification plan, the costs associated with it and the company's updated long-term plans.
Model e, in the red
The most striking figure is that of the net loss per electric vehicle sale. As calculated by Carscoops, Ford loses $32,000 USD on every EV it sells. Model e, Ford’s new electric division, lost $1.8 billion in the second quarter of 2023, on sales of just 34,000 electric and plug-in hybrid models. It had forecast that it would lose $3 billion this year, but now believes losses will hit $4.5 billion.
Clearly, the price war with Tesla hasn't helped matters. The unusual aspect to this battle royale is that the traditional roles are reversed. Here we have the smaller company hurting a giant firm like Ford in a price war.
Now, with all these figures showing in red, Ford has revised its objectives and ambitions. The automaker now wants to give greater priority to hybrid models and has reduced the number of electric vehicles it plans to build in the coming years. Initially, Ford had targeted assembling 600,000 EVs a year by the end of 2023. This has been pushed back to 2024. As for the figure of two million electric models per year, which it wanted to achieve by 2026, there is no longer a fixed timetable, according to what CNBC is reporting this time.
Ford boss Jim Farley stressed that there is no urgency to reach the targets that had previously been announced. “The near-term pace of EV adoption will be a little slower than expected, which is going to benefit early movers like Ford.”
In the meantime, the company will be making greater use of hybrid technology. And the good news for it is that it has healthy cash flow elsewhere, notably in its Pro commercial division, which enjoys high profit margins.
Nevertheless, Ford will have to manage all this carefully, as it plans to bring several electric vehicles to market over the next few years, as well as the infrastructure needed to build them in anticipation of the end of internal combustion models.