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

[axelheimer24]

Okay okay, we get it with the questionable financial analysis and market commentary. Can we all agree that:
1) it was really nice of Ford to “go halfsies” on the price of our cars
2) we should all feel a heightened sense of superiority knowing their our cars cost nearly $120k to make - yes, elevated above the baseline “EV owner superiority”

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[Guss-E 2021]

As someone who has made their living analyzing financial statements since 2008, I can tell you Ford is fine. I pulled up its FYE'22 statements (balance sheet, income statement and statement of cash flows) and it is still riding high from overall higher prices and pent up vehicle demand.

And the Model E division is a startup by the many measures. New technologies, new product type. Lithium certainly wasn't a part of COGS a few years ago. Of course it is losing money right now. And you do not include CAPEX when calculating operating profits or losses. Ford says Model E will hit positive EBITDA in 2026. That is three years. How long did it take Tesla to turn a profit? And Tesla wasn't seeing increasing revenue and margins from other income sources (Blue and Pro). Ford had a $5 billion net add to cash in 2022. Like I said, Ford will be fine.

 

[voxel]

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

I think Ford needs to find a way to cut Mach-E costs and lower the price. EV6 is a great example of an great EV that simply doesn't sell in the US. $52K for the Wind with tech is equivalent to the Mach-E Premium AWD ER... and yet they struggle and sit on lots.

 

[GreaseMonkey]

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

Interesting stuff. But OEMs can’t make money running 35 cars per hour. Mme’s plant is grossly sub scale or severely underutilized. They need to have flexibility to run multiple models in one factory, even a mix of ICE & EVs. Actually, mixing makes more sense cause you would convert plants over time w/ limited capex.

 

[Mach1E]

I think Ford needs to find a way to cut Mach-E costs and lower the price. EV6 is a great example of an great EV that simply doesn't sell in the US. $52K for the Wind with tech is equivalent to the Mach-E Premium AWD ER... and yet they struggle and sit on lots.

Well, it’s more because it’s 1. Ugly and 2. Expensive for a Kia.

The sales data you show above is just another example of how these auto manufacturers can’t just assume significant year over year growth.

I’m guessing car manufacturers have overestimated the adoption rate of BEVs…… and at the same time they’re all building the same car (performance oriented small electric crossover).

Before these BEVs showed up, how tiny was the market for people who bought small crossovers with a 0-60 under 4 seconds? And yet that’s the market everyone is targeting?

 

[voxel]

Well, it’s more because it’s 1. Ugly and 2. Expensive for a Kia.

The sales data you show above is just another example of how these auto manufacturers can’t just assume significant year over year growth.

I’m guessing car manufacturers have overestimated the adoption rate of BEVs…… and at the same time they’re all building the same car (performance oriented small electric crossover).

Before these BEVs showed up, how tiny was the market for people who bought small crossovers with a 0-60 under 4 seconds? And yet that’s the market everyone is targeting?

Kia Tellurides are $50K and they sell 120K+ yearly. Folks had no problem paying $10K markup on them in 2022 either.

Ford needs to trim costs on the Mach-E. LFP is a start. Returning back to 2021 like pricing is another step. Even if Ford could produce 150K Mach-Es... I seriously doubt there is enough demand in the US for them at $50K (after tax credit). You can buy a load gas RAV4 for $33K. Hybrids sell instantly but the $50K RAV4 Primes have discounts as they don't sell like they did a year ago.

I think Ford is stuffing the dealer channels with F-150s. The next quarter or two will be painful for Stellantis, Ford, and GM. Truck inventory on dealer lots is scary high. $5K+ discounts for trucks seem pretty common.

As for small crossovers... the RAV4 is one of the highest selling vehicles in the US for the last decade. 400K+ annually. Compare that to 120K for the larger Bronco and Telluride.

 

[Billyk24]

Tesla's FSD is a cash cow for the company. Soon has never arrived. Is this software money fund part of the vehicle or a seperate entry in the Tesla bottom line? Which brings us to Ford and their software services and income related to ev vehicle profits.

 

[PicoR]

Tesla's big advantage is cutting out dealer networks.

People hated car dealerships before 2020 and now they really hate the experience. I've been to a Kia dealer once and will never go back.

For any legacy automaker to succeed in the EV market longterm, they are going to have to figure this out and get the outdated laws changed about selling direct to the customer.

 

[A-A-Ron]

Agree with last poster, stupid title. I didn't read the article but the number I would want to know is the $ lost/made on the last car they made. If you take the title as is then you would assume if they sold 10 more cars then they would lose $600,000 more. This is likely not anywhere close to true and thus the headline is bad.

When I factor in the price of my home, it turns out a home cooked meal has cost me almost $1000/meal over the past 5 years.

 

[Rubidium]

If ford is making a loss on the incremental cost of a mach-e I'd be shocked.

If you add up everything the EV division has spent and divide it by number of cars sold, then of course its going to be making a loss. Those new factorys have a long term payoff.

 

[Mach1E]

Kia Tellurides are $50K and they sell 120K+ yearly. Folks had no problem paying $10K markup on them in 2022 either.

Ford needs to trim costs on the Mach-E. LFP is a start. Returning back to 2021 like pricing is another step. Even if Ford could produce 150K Mach-Es... I seriously doubt there is enough demand in the US for them at $50K (after tax credit). You can buy a load gas RAV4 for $33K. Hybrids sell instantly but the $50K RAV4 Primes have discounts as they don't sell like they did a year ago.

I think Ford is stuffing the dealer channels with F-150s. The next quarter or two will be painful for Stellantis, Ford, and GM. Truck inventory on dealer lots is scary high. $5K+ discounts for trucks seem pretty common.

As for small crossovers... the RAV4 is one of the highest selling vehicles in the US for the last decade. 400K+ annually. Compare that to 120K for the larger Bronco and Telluride.

I agree with a lot of what you said, but there are a few distinctions, and it specifically has to do with the market share of “performance” crossovers as well as the price point of small crossovers.

People will gladly pay $50k for a full size Telluride because it’s a steal compared to $90k Tahoes.

Same goes with the $33k RAV4 in the small crossover category.

But manufacturers are quickly finding out that the demand for a $63k small Kia performance crossover is…… small.

 

[Mach1E]

Tesla's big advantage is cutting out dealer networks.

People hated car dealerships before 2020 and now they really hate the experience. I've been to a Kia dealer once and will never go back.

For any legacy automaker to succeed in the EV market longterm, they are going to have to figure this out and get the outdated laws changed about selling direct to the customer.

Certainly this model means more profit for the manufacturers, when they get to keep all the profits.

Unfortunately the consumer doesn’t win in that model since the “savings” aren’t passed to them and they lose out on all the convenience of the dealerships.

 

[A-A-Ron]

they lose out on all the convenience of the dealerships.

Would that be the ADM, incompetent service, poor product knowledge, or months long EV service backlog that everyone is going to lose out on? /sar ('cause it's only half /sarcasm)

 

[pianu99]

And the Model E division is a startup by the many measures. New technologies, new product type.

This. All companies are always balancing the need for short-term revenues and long-term innovation. Sometimes, it makes strategic sense to ignore short-term revenue if you believe the longer-term innovation is more valuable.

The longer-term benefit of being a market leader in EVs is many times more valuable than whatever revenue they could secure in their first few years in market. Thus, it makes sense to not even try. It's still a gamble, but at least you are putting your chips on the long-term massive win vs the short-term incremental.

 

[Benny’66]

As someone who has made their living analyzing financial statements since 2008, I can tell you Ford is fine. I pulled up its FYE'22 statements (balance sheet, income statement and statement of cash flows) and it is still riding high from overall higher prices and pent up vehicle demand.

And the Model E division is a startup by the many measures. New technologies, new product type. Lithium certainly wasn't a part of COGS a few years ago. Of course it is losing money right now. And you do not include CAPEX when calculating operating profits or losses. Ford says Model E will hit positive EBITDA in 2026. That is three years. How long did it take Tesla to turn a profit? And Tesla wasn't seeing increasing revenue and margins from other income sources (Blue and Pro). Ford had a $5 billion net add to cash in 2022. Like I said, Ford will be fine.

CAPEX is not included, but depreciation most definitely is. So there is still burden on the bottom line balance sheet from these investments. Also, starting 01/01/2022, companies are required to capitalize their R&D costs, which I’m sure you have seen while living in financial statements. You were specific about what “profit” (Operating) you are referring to, which like EDITA, does not account for amortization. But I would guess the article is referring to Net Profit, which does include all costs incurred against sales revenue. Then again, the reference to “contribution margin break even” is yet a whole other accounting measure. Very confusing.

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