Ford Slashes Their EV Investments After Massive Losses
While electric vehicles (EVs) and battery production are being hailed as the future of the automotive industry, things aren’t looking so great for the companies that are currently producing them.
Swedish EV startup Volta recently filed for bankruptcy because their main battery supplier, Proterra, had to file for bankruptcy. They aren’t making enough money despite having numerous contracts to produce EV batteries and buses for companies and cities.
EV upstart Rivian loses almost $33,000 on every car they sell even though their highly acclaimed electric pickup truck, the R1T, has a price tag of around $75,000. EVs and profitability (unless you’re talking about Tesla or Chinese automakers like BYD) are not bedfellows.
And when it comes to America’s most iconic legacy automakers, like Ford or GM, the picture doesn’t get more promising. While GM recently announced they would be delaying the release of their Silverado EV due to engineering challenges and falling demand for EVs in general, their EV woes don’t seem to be as bad as Ford’s.
But Just How Bad Is Ford's EV Situation?
Even though the automaker’s Mustang Mach-E sales increased by over 42% from the previous quarter, and their overall EV sales rose 44% in the same time frame for a total of 26% growth for their EV sales from last year, they still lost $1.3 billion producing EVs in the most recent quarter.
When breaking it down, Ford loses around $36,000 per EV sold.
Ford estimates they will lose around $4.5 billion making EVs by the end of the year. It’s a good thing that their plant outside of Louisville, Kentucky, generates around $25 billion for them annually making internal combustion engine (ICE) trucks.
What’s Ford’s Next Move for EV Production?
Due to these financial losses, Ford has announced that it will be “scaling back” around “$12 billion in planned EV investments.”
So even though the Mach-E has seen increased sales, its production will be getting slashed because even though EV sales are “growing,” they’re just growing “slower” than Ford initially expected, according to Chief Financial Officer John Lawler, who described EV demand as having “softened.”
This softening EV demand will also see Ford delay production on a new EV battery plant that they’re investing billions of dollars into building in Kentucky.
Why does a car company need an expensive EV battery plant when barely anyone buys EVs? Remember when we mentioned that Volta had to declare bankruptcy because their battery maker went under?
Ford has specified that they are merely scaling back for now, not canceling, and still expect to produce a second generation of EVs. Hopefully, for Ford, those second-generation EVs will be cheaper, sell better, and won’t make them lose $36,000 on every sale.
