Ford faces an uphill battle in the electric car industry, with notable losses recorded in the first quarter of 2024. The electric vehicle division, Model e, scored a loss of 1.3 billion dollars, nearly doubling the previous year’s losses over the same period. This figure becomes even more evident if we consider that, for every one of the 10,000 electric vehicles sold in the first three months of the year, Ford lost an average of 132,000 dollars.
Because Ford is making a loss
The automaker Ford attributes these losses mainly to need to lower the prices of its electric models to remain competitive on the market, while continuing to invest heavily in research and development. Revenue from electric vehicles in the first quarter of 2024 fell sharply by 84% from the previous year, reaching just $100 million.
This phenomenon is attributable to increased competition and price wars in this market segment, which has forced Ford to drastically reduce the prices of its electric vehicles. According to a C&D commentary on the topic, the outlook for 2024 calls for further intensification of competition, further complicating the situation for the automotive company.
Future forecasts do not appear to be any brighter: in 2023, the company reported losses of $4.7 billion in its electricity division, and for 2024 an even larger deficit of $5 billion is expected.
The losses incurred also include large investments earmarked for research and development of the group’s future electric vehicles, funds which are not expected to be recovered in the short term. Ford has indicated that it intends to ensure that, within the next 12 months, electric vehicle prices reflect actual production costs, excluding research and development costs.
These losses are offset by the brand’s other divisions: Ford Pro made a profit of $3 billion, while Ford Blue generated revenue of $21 billion, despite a 13% decrease from the previous year.
Despite the current losses, Ford is banking on the future and hopes that current investments in the electric sector will lead to a stronger position in the near future. The company is working intensively on the development of new generations of electric vehicles, with the aim of achieving long-term profitability. CEO Jim Farley reassured investors that the company is making significant changes in its electric business and that the next generation of vehicles will allow Ford to emerge as a leader in this field as well.
Electric cars are not yet convincing the market
Despite the huge investments required by regulations, sales of electric cars represent only a fraction of those of traditional vehicles, while demand remains tepid both in the United States and in Europe, where the obligation to sell electric cars is expected starting from 2035.
Tesla stands out as an exception, with the Model Y driving sales thanks to value for money and tax incentives. However, for the rest of the traditional automotive industry, the situation is different: it is necessary to balance investments in electric with the sale of traditional vehicles still preferred by consumers.
