Ford Model E Division Lost $60K on Every Electric Vehicle It Sold in the First Quarter

[flapjake314]

There is a reason why the Ford's stock 52 weeks high is $15.88, shitty Rivian is trading higher than Ford, the 100+ years old company.

this is a misinformed comment. i don't know by what metric "rivian is trading higher than ford", if you can find me anyone that has made [material] gains on rivian stock i'll be shocked. rivian is trading -90% down from their IPO

here is their comparative charts for the last 12 months since that's the metric you used

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[flapjake314]

Right. To that point, I'd like to know what the total variable costs are per vehicle. But I cannot find that so maybe it isn't public information. Fixed costs are, of course, relevant, but muddy the waters when we don't know the fixed costs are being distributed.

Looking at "earnings" is useless without knowing how thinly or thickly Ford is spreading its fixed costs over an unspecified time frame. Unless there's an accounting standard which specifies how those fixed costs have to be spread. I have no idea.

there is and it's in their 10-k

 

[rkmoray]

No doubt that loss included the billions spent on R&D as well as retooling, etc

 

[eleven24]

Tesla was burning cash heavily in the first decade of its existence. It survived only on investors and selling clean air credits to the legacy OEMs.

Legacy OEMs like Ford essentially paid for Tesla's Supercharger network, which is now their biggest advantage in the EV market.

 

[nvabill]

 

[Mach1E]

No they wouldn't, because the reason almost anyone goes on Shark Tank is because initial production of something is simple, ramping up and investment in new tech is expensive. So they go to Shark Tank to get investment for that expansion.

Flipping it to Ford's situation, they spun Model e off into its own entity because it is operating as a start up in a sense, it's building its own product portfolio, investing in new models and new tech that isn't used by the rest of the org, and is in a heavy expansion and factory build up that no part of Ford's ICE division is dealing with. Instead of going to "the sharks" for money though, they get the investment from Ford Blue.

They use the $60k loss because it's attention grabbing but it isn't talking about the cost to build a Mach-e and sell it, in a vacuum. Right now the profit margins are slim on EVs, and the Model e division is building Blue Oval City, the REVC expansion, investment/development in next gen EVs, and ongoing investment in battery tech. So even if Ford made $10k on every EV sold, Lightning or MME or Transit Electric, just to keep it simple, the division is spending $70k for every EV they sell in building new factories and all the things I noted above. That doesn't mean their vehicles aren't selling at a profit, but they aren't yet selling enough EVs to offset the costs of building all the new factories and so on. But you need those factories to eventually get to that point.

That is very typical, Tesla was burning cash heavily in the first decade of its existence. It survived only on investors and selling clean air credits to the legacy OEMs. Ford is in a similar investment structure now, but is relying on ICE sales to offset. I don't know how you possibly envision it working any other way.

Yes, ramping up production, building new factories, investing in new tech is very expensive.

But that’s exactly what Ford does every time they come out with a new model.

Yes, batteries are more expensive than ICE engines, but all the other stuff in the car is the same stuff they’ve been building in cars for decades.

They absolutely need to figure out how to sell BEVs at a profit.

This isn’t a “typical tech startup” situation where you can promise exponential growth and a pot of gold (profits) at the end of the growth rainbow.

They’re already selling 50,000 Mach Es at a huge loss right now……. And just dropped the selling price.

Show me the numbers of what happens when they get up to 150,000 to 200,000 sold per year.

My gut says at the current cost and selling price……. It’s still a loss.

Comparing to Amazon and Tesla is absurd at this point. Ford had everything they needed already in place, except the batteries, which are outsourced anyways.

They aren’t starting from scratch. And now it feels like they are just making excuses for losing money.

 

[Vulnox]

Yes, ramping up production, building new factories, investing in new tech is very expensive.

But that’s exactly what Ford does every time they come out with a new model.

Yes, batteries are more expensive than ICE engines, but all the other stuff in the car is the same stuff they’ve been building in cars for decades.

They absolutely need to figure out how to sell BEVs at a profit.

This isn’t a “typical tech startup” situation where you can promise exponential growth and a pot of gold (profits) at the end of the growth rainbow.

They’re already selling 50,000 Mach Es at a huge loss right now……. And just dropped the selling price.

Show me the numbers of what happens when they get up to 150,000 to 200,000 sold per year.

My gut says at the current cost and selling price……. It’s still a loss.

Comparing to Amazon and Tesla is absurd at this point. Ford had everything they needed already in place, except the batteries, which are outsourced anyways.

They aren’t starting from scratch. And now it feels like they are just making excuses for losing money.

That is not what Ford does every time they come out with a new vehicle. It's very rare these days for Ford to ground up a new plant for ICE. The Bronco, an all new model, is built at MAP, which was building the Ranger. The plant was building the Focus before the Ranger. That's two models that have been brand new introduced into the market (after a hiatus of course) that went into an existing plant.

The F-150 Lightning, as a comparison, went into REVC which is a ground up brand new building at the Rouge, and is undergoing a massive expansion, its fourth expansion I believe (third or fourth), but by far its largest.

Plus Blue Oval City and the new battery plant in Michigan, two enormous investments that have been carrying financial burden within the past year, including the recent quarter.

Even in the existing plant like CuAP where the MME is built, they just did a massive retooling in the first quarter of this year to increase capacity, also expensive.

You even attempting to compare this to Ford's past decade of ICE development is insane. The last new factory for ICE is the Otosan JV in Turkey in 2014, and being a JV it would have shared costs.

You just aren't making sense, or aren't aware of where these numbers are coming from, or something. Ford's investment in Model e in just the past year likely dwarfs their infrastructure investment in ICE vehicles over the last ten years combined. It's moving rapidly. None of what I talked about even covers the Explorer BEV launch which is also an expense on Model e and hasn't started selling yet. How all of this rapid development and expansion is supposed to be profitable in your mind is... just unknowable.

 

[Vulnox]

There is a reason why the Ford's stock 52 weeks high is $15.88, shitty Rivian is trading higher than Ford, the 100+ years old company.

If you think stock price is representative of company value in the stock market I insist you not do your own stock buys until you look into it more.

Ford's Market Cap is 47 Billion, Rivian's is 11 billion.

Even at 11 billion, I think it's a bit high, but it's likely speculative if they can execute with the R1S and expand their Amazon van sales and the like. But to say Rivian is valued higher is incredibly untrue.

GMs Market Cap is 45.6 billion, also lower than Ford.

There is, of course, even more complexity to a company valuation than even market cap. But stock price itself is only meaningful to those that already own the stock (as they want to see it go up, obviously), or those that only have $20 to invest and are trying to find that one share they can afford. Otherwise you need to make a lot of other considerations when determining value.

 

[Mach1E]

That is not what Ford does every time they come out with a new vehicle. It's very rare these days for Ford to ground up a new plant for ICE. The Bronco, an all new model, is built at MAP, which was building the Ranger. The plant was building the Focus before the Ranger. That's two models that have been brand new introduced into the market (after a hiatus of course) that went into an existing plant.

The F-150 Lightning, as a comparison, went into REVC which is a ground up brand new building at the Rouge, and is undergoing a massive expansion, its fourth expansion I believe (third or fourth), but by far its largest.

Plus Blue Oval City and the new battery plant in Michigan, two enormous investments that have been carrying financial burden within the past year, including the recent quarter.

Even in the existing plant like CuAP where the MME is built, they just did a massive retooling in the first quarter of this year to increase capacity, also expensive.

You even attempting to compare this to Ford's past decade of ICE development is insane. The last new factory for ICE is the Otosan JV in Turkey in 2014, and being a JV it would have shared costs.

You just aren't making sense, or aren't aware of where these numbers are coming from, or something. Ford's investment in Model e in just the past year likely dwarfs their infrastructure investment in ICE vehicles over the last ten years combined. It's moving rapidly. None of what I talked about even covers the Explorer BEV launch which is also an expense on Model e and hasn't started selling yet. How all of this rapid development and expansion is supposed to be profitable in your mind is... just unknowable.

You’re completely missing the point.

I’m fully aware of everything above and the costs involved.

And it’s STILL absurd to compare themselves with Amazon and Tesla when talking about the losses.

Again, what does the balance sheet look like when they’re selling 150k to 200k Mach Es?

Yes, they need to build new factories. But that is NOT a new concept for them. And again, they aren’t starting from scratch (unlike Rivian, Tesla, Lucid etc who didn’t have an existing company who’s built cars for 100+ yrs).

So any comparison to an actual startup tech company, let alone two of the most valuable ones on the planet…….. is absurd. And yeah, the Sharks would laugh them out of the room if when questioned about losses, they said “well Amazon didn’t make a profit until 2015…….”

 

[Mach1E]

If you think stock price is representative of company value in the stock market I insist you not do your own stock buys until you look into it more.

Ford's Market Cap is 47 Billion, Rivian's is 11 billion.

Even at 11 billion, I think it's a bit high, but it's likely speculative if they can execute with the R1S and expand their Amazon van sales and the like. But to say Rivian is valued higher is incredibly untrue.

GMs Market Cap is 45.6 billion, also lower than Ford.

There is, of course, even more complexity to a company valuation than even market cap. But stock price itself is only meaningful to those that already own the stock (as they want to see it go up, obviously), or those that only have $20 to invest and are trying to find that one share they can afford. Otherwise you need to make a lot of other considerations when determining value.

A “bit high” is an understatement for Rivian.

Not sure why investors are using tech startup valuations for manufacturing companies.

It won’t end well for the investors.

At the end of the day, manufacturers have to sell a product at price that makes a profit.

Tech startups get to sell “the dream of future exponential growth.” And eventually have a model that with enough volume it’ll actually generate enough revenue to make a profit.

If you’re building and selling cars, the path to profitability, and the math should be pretty simple:

They know the upfront costs (manufacturing plant, R&D), they know the variable costs (manufacturing costs, marketing etc). And for anyone already delivering cars, they know the selling price.

Should be able to do that math on a napkin to figure out how many cars you deliver in how many years before you turn a profit.

But they won’t tell us those numbers. Instead they want to distract us with “Amazon and Tesla” comparisons.

What they SHOULD do, is tell us the above math. “By 2027, if we can deliver X number of vehicles, we will be profitable.”

My gut says they still won’t.

 

[deadduck]

Tesla was a Wall Street darling for never making a profit up until recently ?‍

A start up can have $500M in sales, a $200M loss and be worth more than a company like Ford. It's a wonderful thing, not having a profit, it makes you harder to value.

 

[Johnny572]

Ford Model E Division Lost $60K on Every Electric Vehicle It Sold in the First Quarter

Ford Model E Division Lost $60K on Every Electric Vehicle It Sold in the First Quarter
Cristian Agatie
3 May 2023, 10:01 UTC
Ford reported its first-quarter financials, showing that the losses at its EV division Model e are widening. The Blue Oval lost over $60,000 for every EV sold in the quarter. Although Ford earned a lot of money from its legacy divisions, Ford Blue and Ford Pro, with the overall results exceeding expectations, the investors weren't thrilled.

After GM, Ford is the second most bullish legacy carmaker about electric vehicles. Its CEO, Jim Farley, boasted about overtaking Tesla in a heartbeat a year ago but has since lowered expectations. As the Blue Oval has started breaking down its financial results for its three divisions Ford Blue (legacy ICE vehicles), Ford Pro (commercial vehicles), and Model e (electric vehicles), it became clear that Ford's EV business is not going very well. Still, Jim Farley showed his optimism in the May 2 earnings call.

Ford posted first-quarter revenue of $41.5 billion, up 20% from Q1 2022, and improved margins of 8.1%, up 1.4 percentage points. Adjusted earnings before interest and taxes rose 45% to $2.4 billion, which should be considered a good sign for the company. Still, investors couldn't overlook that most of that, or $2.6 billion, came from Ford Blue, its legacy ICE business. More worrying, Ford posted losses of $722 million on its EV business, Model e.

Ford sold 12,000 electric vehicles in the quarter, spending $60,000 more per car than its average selling price. Considering that Ford Model e average selling price was around $58,000 in the first quarter, the Blue Oval spent $118,000 on average for every EV it sold. This made Tesla fans joke that Ford should buy a Model Y, slap a Ford badge on it, and still lose less money. The losses are expected to accelerate in the second quarter, as Ford announced an up to $4,000 price cut on the Mustang Mach-E.

Ford F-150 Lightning production was impacted by a battery fire in February, and the Mustang Mach-E production was also halted to upgrade the production line. The EV production at the Ford Model e division dropped from 30K units in Q4 2022 to 12K in Q1 2023. This explains the drop in revenue, but it's likely that the higher production would've led to more significant losses for Ford.

In a call with investors at the end of March, Ford executives warned that its EV business would continue to lose money for the foreseeable future. Ford likened its Model e division to an EV startup, promising the situation should improve when production scales up in the coming years. The total losses for the year are projected to reach $3 billion. Still, Ford expects to approach contribution margin breakeven on EVs by the end of 2023. It also hopes to have 8% margins on EVs by late 2026.

Building out new EV facility’s and new EV technologies is expensive and Ford said its Model E wouldn’t be profitable for 4-5 years or longer. But they still make a profit on the ice side. Tesla took 8 years to make profit and all most one bankruptcy.

 

[SpaceEVDriver]

Building out new EV facility’s and new EV technologies is expensive and Ford said its Model E wouldn’t be profitable for 4-5 years or longer. But they still make a profit on the ice side. Tesla took 8 years to make profit and all most one bankruptcy.

It took Tesla 17 years to reach a full year of profitablity. Ford Model-E will be there by 2024. They expect to have 8-10% margins by 2026.

 

[Sam2084]

Article is dumb. Talk CoGS or GTFO.

 

[mache_matt]

Thought this was interesting, especially the increase in Mach e capacity to 35 jobs per hour..

Assuming they work 2 shifts = 16 hrs a day, 6 days a week .. that would be 3360 MMEs per week .. about 12k per month

Hopefully they have the demand to sell these many MMEs and they should be fine going forward

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