Summary
– Ford’s electric vehicle unit reported a loss of $1.3 billion in the first quarter
– The Model e unit sold 10,000 vehicles, down 20% from the previous year
– A price war among EVs has impacted profitability in the industry
– Ford Pro unit saw increased profits, while Ford Blue unit experienced a decline in sales
– Ford CEO believes changes in the EV business will lead to profitability in the future
Article
Ford’s electric vehicle unit, Model e, reported losses of $1.3 billion in the first quarter of the year, equating to $132,000 for each of the 10,000 vehicles sold during that time. This significant loss contributed to a decrease in overall earnings for the company. The results highlight the profit pressures that traditional automakers are facing as they transition from gas-powered vehicles to EVs. The price war among EVs has made profitability difficult, with revenue dropping faster than costs can be reduced.
In 2023, Model e reported a full-year EBIT loss of $4.7 billion on sales of 116,000 EVs, amounting to an average loss of $40,525 per vehicle. Despite these losses, Ford has strong demand for electric vehicles in its Ford Pro unit, which handles fleet sales. The company received orders for E-Transit vans from the US Postal Service and F-150 Lightning pickups and Mustang Mach-E SUVs from Ecolab. CEO Jim Farley expressed confidence that changes in the EV business will lead to profitability in the near future.
Ford Pro, the unit primarily selling traditional internal combustion vehicles, was the primary profit driver for Ford in the first quarter, posting EBIT of $3 billion, more than double the previous year. Revenue from Ford Pro rose 36% to $18 billion, with an increase in vehicles sold. On the other hand, Ford Blue, handling sales of gasoline-powered cars to consumers, reported declines in sales and revenue, resulting in a significant decrease in EBIT. While overall profits for Ford remained relatively steady year over year, losses in the Model e unit impacted net income and adjusted earnings per share.
Ford’s results come in comparison to other automakers, such as General Motors, which is on track to have its North American EV business turn profitable in the second half of the year, and Stellantis, whose European EV business was profitable last year. Tesla, the world’s largest EV maker, reported a 48% plunge in adjusted earnings in the first quarter, with a 9% drop in revenue following the first year-over-year sales decline since the pandemic. These results highlight the challenges faced by automakers in the transition to electric vehicles and the competitive landscape of the EV market.
Ford’s focus on profitability and improvements in the EV business, along with strong demand in the Ford Pro unit, indicate a strategic shift towards sustainable and profitable electric vehicle sales. The company’s adjustments and planned next generation of EVs suggest a commitment to overcoming the challenges faced in the current market. As the industry continues to evolve and adapt to the increasing demand for electric vehicles, Ford is positioning itself to remain competitive and successfully navigate the transition from traditional gas-powered vehicles to EVs.
Read the full article here