Mach-E Production Costs Increases and No Longer Profitable For Ford

[kennethjk]

From Automotive News

“Ford Credit CEO Marion Harris, speaking at Ford’s first-quarter earnings call in April, noted the marginal increase in delinquencies largely came on the back of strong used-car values, which the company expects to remain strong. A Ford Credit spokeswoman said the automaker’s captive finance arm would provide more details at the end of July when it reports second-quarter earnings.

The automaker, Lawler said, remains concerned about rising commodity costs, which it expects to jump about $4 billion year-over-year. Those rising costs, he said Wednesday, have wiped out the early bottom line profit it made off of the Mustang Mach-E crossover.”

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[jeffdawgfan]

Is it possible they meant the total cost is 25K....although that seems way to low for me.

 

[AllenXS]

Either way its going to help push expectations on the next price increase

 

[KlueBat]

Is it possible they meant the total cost is 25K....although that seems way to low for me.

John Lawler never gave a number. CNBC posted a correction.

 

[Bigfeets]

Via jalopnik article:

Ford's Cost to Build the Mach-E Increased $25,000 Per Car Due to Battery Prices Skyrocketing
While inflation has wiped out the profits Ford made off the EV, consumer demand remains strong.

June 15, 2022​

​

Ford is preparing for an economic downturn, at least according to the automaker’s CFO. The company has recently seen record profits with strong demand from vehicles like the Maverick, Mustang Mach-E, Bronco, and F-150 Lightning. But as CNBC News reports, like most Americans the company isn’t immune from the effects of inflation.​

​

Ford made money in 2021, raking in nearly $18 billion in profit. Granted a lot of that was on the back of its stake in Rivian, but still, people want what the brand is selling. In January of this year alone, Ford sold nearly 155,000 vehicles. They’re selling them faster than they can make them, despite having to raise prices to offset inflation.​

​

While this has helped the company’s profit margins, not everything is immune. Speaking at a conference hosted by Deutsche Bank, Ford’s CFO John Lawler stated how inflation has affected the company, namely the Mustang Mach-E. He added that even though the company raised the price of the Mach-E with the rest of its lineup to offset inflation, the double squeeze of rising battery materials costs and inflation gobbled up the Mach-E’s profits. While Lawler didn’t state how much the company could be potentially losing at this time on every Mach-E it sells, he stated that costs for the EV gone up to the tune of $25,000.​

​

In a sign that the gravy train could stop running at any time, Lawler stated that the Ford is taking steps to prepare for an economic downturn. The main sign of things to come? Late car payments. Lawler said Ford Credit, Ford’s vehicle financing arm, has started to see more and more late payments. I guess those 84-month loans Ford defaulted to on some models weren’t a good idea after all. And while Lawler reassured that the company is in a better position for an economic downturn than before, if the economy does tank a bit, automakers and consumers are going to get hit hard.​

​

Automakers have been pouring billions into an EV transition. Many could be in the same position as Ford with inflation eating up profits as manufacturing costs rise. And with vehicle prices higher than ever, and consumers taking out longer and longer loan terms to finance them (and the markups that dealers have been placing on them), this all has the potential to get really bad before it gets better.​

 

[vinny2487]

Funny enough, none of the owners that drive one are saving money over an ICE vehicle either.

As nice as the Mach-E is, it's a $25,000 vehicle with another $25k worth of batteries in it.

You could find a comparably optioned ICE crossover for around $30k vs. Mach-E's $50k price tag. Add to that higher insurance premiums, and any illusion of saving money vs. driving an ICE car only make sense over a 10+ year lifespan.

What $30k crossover has similar options that also matches the performance of the Mach E?

 

[nvabill]

I can't come to this forum and wade through this endless reactionary pile anymore. This thread has NO accurate numbers, it's title quotes a misprint and a too stupid to take seriously misprint at that.

The recall 22S41 thread is at 56 pages.

Seriously. Who has the time....?

Exactly, how can anyone possible think the price of Mach E batteries went up $25,000, incredible!

 

[Guppydriver]

Either way its going to help push expectations on the next price increase

OR....

This puts pressure on an administration that seems committed to EV's to extend, if not increase federal subsidies. If I were an auto executive, I'd try to come up with the biggest loss numbers and loudest cry possible. That $7500 is a huge draw for a lot of people who buy EV vehicles and it allows a manufacturer to increase margins without taking it from buyers pockets.

 

[AllenXS]

OR....

This puts pressure on an administration that seems committed to EV's to extend, if not increase federal subsidies. If I were an auto executive, I'd try to come up with the biggest loss numbers and loudest cry possible. That $7500 is a huge draw for a lot of people who buy ice vehicles and it allows a manufacturer to increase margins without taking it from buyers pockets.

Ohh yes, they did just all the govt. to extend it for the subsidies. Great timing…..

 

[leeman]

Via jalopnik article:

Ford's Cost to Build the Mach-E Increased $25,000 Per Car Due to Battery Prices Skyrocketing
While inflation has wiped out the profits Ford made off the EV, consumer demand remains strong.

June 15, 2022​

​

Ford is preparing for an economic downturn, at least according to the automaker’s CFO. The company has recently seen record profits with strong demand from vehicles like the Maverick, Mustang Mach-E, Bronco, and F-150 Lightning. But as CNBC News reports, like most Americans the company isn’t immune from the effects of inflation.​

​

Ford made money in 2021, raking in nearly $18 billion in profit. Granted a lot of that was on the back of its stake in Rivian, but still, people want what the brand is selling. In January of this year alone, Ford sold nearly 155,000 vehicles. They’re selling them faster than they can make them, despite having to raise prices to offset inflation.​

​

While this has helped the company’s profit margins, not everything is immune. Speaking at a conference hosted by Deutsche Bank, Ford’s CFO John Lawler stated how inflation has affected the company, namely the Mustang Mach-E. He added that even though the company raised the price of the Mach-E with the rest of its lineup to offset inflation, the double squeeze of rising battery materials costs and inflation gobbled up the Mach-E’s profits. While Lawler didn’t state how much the company could be potentially losing at this time on every Mach-E it sells, he stated that costs for the EV gone up to the tune of $25,000.​

​

In a sign that the gravy train could stop running at any time, Lawler stated that the Ford is taking steps to prepare for an economic downturn. The main sign of things to come? Late car payments. Lawler said Ford Credit, Ford’s vehicle financing arm, has started to see more and more late payments. I guess those 84-month loans Ford defaulted to on some models weren’t a good idea after all. And while Lawler reassured that the company is in a better position for an economic downturn than before, if the economy does tank a bit, automakers and consumers are going to get hit hard.​

​

Automakers have been pouring billions into an EV transition. Many could be in the same position as Ford with inflation eating up profits as manufacturing costs rise. And with vehicle prices higher than ever, and consumers taking out longer and longer loan terms to finance them (and the markups that dealers have been placing on them), this all has the potential to get really bad before it gets better.​

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[Bigfeets]

While waiting 28 weeks to get a build date, and having already bought a Hyundai Ioniq 5 Ltd while waiting, I'm thinking I will do my best to have Ford sell me the long-awaited MME with price protection and no-ADM. (Don't care much about Ford's profit margin, although I don't want dealer to be given another markup opportunity.) After that, I don't know yet what I'll do with the MME. Donation comes to mind. Anyone know what happens with Ford price protection promise or Fed tax credit with donation?

ps Although this is a bit of a thread hijack, I thought it was okay since the point of the thread has been blunted by the correction.

 

[Bigfeets]

Ohh yes, they did just all the govt. to extend it for the subsidies. Great timing…..

So, you think Congress is going to come together in an election year or next?

 

[tuminatr]

Tesla didn’t make a profit off vehicles for what, 10 years? That didn’t hurt it’s fake stock price.

They still don't make money on EV's, carbon credits is the only reason they are in the green

Correction looks like they did make money in 2021 , but carbon credits were still a huge part of that

https://www.caranddriver.com/news/a32346670/other-automakers-paid-tesla-record-354-million/

 

[voxel]

Exactly, how can anyone possible think the price of Mach E batteries went up $25,000, incredible!

I could believe $5K-10K easily. Lithium, Nickel, Cobalt raw materials have skyrocketed.

Cobalt has risen 300% and Nickel + Lithium have jumped 200% since 2020.

And also the cost of shipping, parts, aluminum, steel, electronics, etc.

 

[voxel]

They still don't make money on EV's, carbon credits is the only reason they are in the green

https://www.caranddriver.com/news/a32346670/other-automakers-paid-tesla-record-354-million/

That was 2020.

I think they turned a profit in 2021 for the first time which coincides with the explosive EV sales.

https://www.forbes.com/sites/greats...ue-to-bolster-teslas-profits/?sh=6128d6d562d8

"Tesla now appears to be solidly profitable even without credit sales. For perspective, for the first three quarters of 2021, we estimate that pre-tax profits would have stood at over $2.5 billion, excluding tax credits. "

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