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.
Become a TTAC insider. Get the latest news, features, TTAC takes, and everything else that gets to the truth about cars first by subscribing to our newsletter.
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.
More by Chris Teague