Ford’s electric vehicle unit reported significant losses in the first quarter of the year, with a total loss of $1.3 billion, translating to about $132,000 for each of the 10,000 vehicles sold during that period. This contributed to a decline in earnings for the company as a whole. Despite this, Ford has plans to transition from traditional gas-powered vehicles to EVs, in line with other automakers in the industry. Ford is the only traditional automaker to disclose the results of its retail EV sales, shedding light on the challenges faced in the EV business.
The EV unit, known as Model e, sold 10,000 vehicles in the quarter, which was a 20% decrease compared to the previous year. Revenue for the unit dropped by 84% to approximately $100 million due to price cuts in the industry. This led to a significant loss of $1.3 billion before interest and taxes, resulting in a substantial per-vehicle loss in the Model e unit. Ford’s CFO mentioned that a price war among EVs has made profitability increasingly challenging, even as they work to reduce costs on vehicles like the Mustang Mach-E.
In 2023, Ford Model e reported a full-year EBIT loss of $4.7 billion on sales of 116,000 EVs, averaging $40,525 per vehicle, which was slightly less than a third of the first-quarter loss. Despite these losses, some of Ford’s electric vehicles are sold through its Ford Pro unit, which focuses on fleet sales to businesses and government buyers. The company has seen strong demand for electric vehicles in this unit, including substantial orders from the US Postal Service and Ecolab, a global sustainability company.
Ford’s CEO assured investors that they are making changes in their EV business and are confident that the next generation of EVs will allow them to be profitable in the near future. Despite the losses in the EV unit, Ford Pro, which primarily sells traditional internal combustion vehicles, was a significant profit driver for the company in the quarter. The unit posted an EBIT of $3 billion, more than double what it made the previous year, with revenue rising by 36% to $18 billion. On the other hand, Ford Blue, which handles gasoline-powered car sales to consumers, experienced a decrease in sales and revenue, leading to a decline in EBIT.
Ford’s overall net income fell by 20% to $1.3 billion, with adjusted earnings per share dropping to 49 cents, down 21% from the previous year. This was slightly above analyst forecasts of 44 cents per share. In comparison, Ford’s rival General Motors is on track to have its North American EV business turn profitable in the second half of the year, while Stellantis reported profitability in its European EV business last year. Tesla, the largest EV maker, reported a decline in adjusted earnings in the first quarter as revenue also fell, marking the first year-over-year drop in sales since the pandemic.
