Ford is cutting battery orders in yet another sign that the EV market, despite a constant tailwind from the U.S. taxpayer, is starting to slow.
The company is cutting the orders to curb electric-vehicle losses as it scales back its EV strategy in a slowing plug-in market, according to insiders who spoke to Bloomberg.
Ford CEO Jim Farley has said the company's EV unit “is the main drag on the whole company right now" and CAT said its “cooperation with Ford is moving forward as normal”.
The company responded by saying it wouldn't comment on relationships with suppliers.
Bloomberg notes that with plummeting EV prices and weakening demand, Ford's losses per electric vehicle exceeded $100,000 in the first quarter, doubling last year's deficit.
Bloomberg Intelligence estimates that Ford's projected EV unit losses this year will nearly offset profits from its Ford Blue division, which produces traditional internal combustion engine vehicles like the Bronco SUV and gas-electric hybrids such as the Maverick truck.
BI analysts said of the results: “That raises questions about the prudence of investing heavily in EVs.”
Ford's order reductions highlight industry challenges as U.S. automakers face weaker-than-expected EV demand and battery makers in South Korea, China, and beyond struggle with unsold inventory.
Making a great electric car at a great price is extremely difficult
— Elon Musk (@elonmusk) May 10, 2024
This has affected prices for key metals like lithium, cobalt, and nickel, leading to multiyear lows and stalling new projects. Ford has reduced EV production costs but had to cut prices to stay competitive with Tesla.
Ford CFO John Lawler said in April: “We’ve seen prices coming down quite dramatically and that’s why we haven’t been able to keep up from a cost reduction standpoint.”
He continued: “But we’re targeting to take out as much cost this year as we can on Model e and all in the spirit of driving toward that contribution margin positive.”
He concluded: “Model e has to stand on its own. It needs to be profitable and it has to provide a return on the capital we’re investing.”
Thus, its no surprise to us (or to our readers, we're sure) why, exactly Ford is cutting back on its EV investments.
Recall we noted from the Epoch Times just days ago that on April 24, Ford reported it lost $132,000 for each of its 10,000 electric vehicles sold in the first quarter of 2024, according to CNN. The sales were down 20 percent from the first quarter of 2023 and would “drag down earnings for the company overall.”
The losses include “hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off.” Ford is the only major carmaker breaking out EV numbers by themselves. But other marques likely suffer similar losses.
