Ford's electric vehicle unit faced significant losses in the first quarter, with a reported $1.3 billion loss, equating to $132,000 per vehicle sold. This contributed to a decline in the company's overall earnings. The company, along with other automakers, is transitioning towards electric vehicles (EVs) in the upcoming years. Ford is the only traditional automaker to disclose retail EV sales results, shedding light on the challenges faced by the EV business.
The EV unit, known as Model e, sold 10,000 vehicles in the quarter, a 20% decrease from the previous year. Revenue plummeted by 84% to approximately $100 million, primarily due to industry-wide EV price reductions. This led to a substantial loss of $1.3 billion before interest and taxes, resulting in a significant per-vehicle loss within the Model e unit.
Ford's CFO highlighted the intense price competition in the EV market, making profitability a daunting task. Despite cost reductions on vehicles like the Mustang Mach-E, revenue decline outpaced cost savings efforts.
In 2023, Ford Model e reported a full-year EBIT loss of $4.7 billion on sales of 116,000 EVs, averaging $40,525 per vehicle, a fraction of the first quarter loss. Not all electric vehicle sales are handled by Model e, as some are managed by the Ford Pro unit, catering to fleet sales.
Although facing EV losses, Ford remains optimistic about its EV business, with plans for the next generation of EVs expected to drive profitability. Ford Pro, focusing on traditional internal combustion vehicles, was a key profit generator for the company in the quarter, posting an EBIT of $3 billion.
On the other hand, Ford Blue, responsible for gasoline-powered car sales to consumers, experienced a decline in sales and revenue, resulting in a significant drop in EBIT. Despite this, Ford's overall net income decreased by 20% to $1.3 billion, with adjusted earnings per share slightly exceeding analyst forecasts.
General Motors and Stellantis are also making strides in the EV market, with plans for profitability in North America and Europe, respectively. Tesla, the leading EV manufacturer, reported a decline in earnings and revenue for the first quarter, marking its first year-over-year sales drop since the pandemic.
