Ford's EV Business is Becoming a Real Drag
Ford and the UAW have reached a tentative agreement that will end the strike at some locations, but the automaker is looking at lower profits and a challenging road ahead with electrification.
The automaker’s earnings fell short of expectations, and it saw continued losses from its electric vehicle business. Ford said it would delay some of the planned EV investments after seeing less demand and more price pressure than expected.
Ford already announced significant losses from its electrification efforts, but its EV division posted greater shortfalls than projected. It lost $1.3 billion before taxes and interest, and Ford noted a $4.5 billion loss overall.
The writing has been on the wall for a while, so none of this should be a huge surprise. Ford already noted losses in its EV business, and we’ve seen multiple changes in its pricing and production strategies for the F-150 Lightning, indicating that demand for the electric pickup is fluctuating.
Ford said consumers are unwilling to pay more for an EV than a comparable internal combustion vehicle, putting significant downward pressure on pricing. Though more affordable models are allegedly on the horizon, the EV market as a whole is too expensive, preventing many potential buyers from getting behind the wheel. Upcoming changes to the EV tax credit rules may help, but it will likely be years before EVs reach parity with their gas counterparts.
[Image: Ford]
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Chris grew up in, under, and around cars, but took the long way around to becoming an automotive writer. After a career in technology consulting and a trip through business school, Chris began writing about the automotive industry as a way to reconnect with his passion and get behind the wheel of a new car every week. He focuses on taking complex industry stories and making them digestible by any reader. Just don’t expect him to stay away from high-mileage Porsches.
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The transition to EV's has a number of issues to contend with. I think most of the issues are worth considering when investing in a new vehicle.
Manufacturers globally have spent the last couple of decades or so pushing back against the transition to EVs. Manufacturers have considerable lobby power, now the time has come to transition and now they complain after pushing back.
The US has a particular problem, big pickups and SUVs is what keeps the motoring industry alive.
Oh Lordy, it's like high school all over again. One of the AV club nerds got an EV, some of the hipper but geek-positive kids got an EV. Some of the tag along kids kids thought about making EV's, ie. GM & Ford. The head-knockers refused facts and math and threatened to beat up any even speaking positively of an EV. Lambda, Lambda, Lambda rules!
Pretty hard to compete with Tesla when the landscape for legacy manufacturers like GM, Ford, etc. is so different. Tesla was treated like a Tech company, Billions of VC and Federal dollar flooded in during the early days just to keep them alive. Once production started, Tesla was given a pass for their shoddy assembly quality, poor fit & finish and early recalls, all of those would have been deemed unacceptable if it was a Chevy, but hey, this is Tech, it's not expected to work right, correct? No investment in dealer or service network nationwide and in some cases a lengthy wait for parts or service, that would be unacceptable if it was a Ford where the dealer would be crucified for not getting the car back on the road in 24 hours. Finally, the legacy manufacturers dependence on the UAW and their inflated wages and benefits put building EVs at a disadvantage compared to Tesla. I'm not knocking Tesla, what they accomplished has been remarkable. Just that the playing field and expectations are not the same for a start up as they are for a legacy OEM.
GM and Ford cannot seem to break the 40,000 annual sales barrier for any EV. On-the-other-hand GM still sells close to 200,000 Malibu's a year. I can see now why half of all Buick dealerships in the nation took a buy-out instead of investing in EVs. The Blazer EV, which got Motor Trend's COTY, is already having a whole host of problems in early testing. Edmunds found 23 problems in their test Blazer EV last week. This is a bad sign.