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Ford cancels EV battery orders as losses widen to $130,000 per vehicle sold
(www.notebookcheck.net)
this post was submitted on 13 May 2024
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[Dormant] Electric Vehicles
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Wtf are these crackheads doing? EV's are insanely simple machines compared to combustion ones. How could you ever fuck your production cost so much as to get losses like that. This feels like a manufactured failure to get bailed out or to stir public opinion on the whole china EV situation.
It's because there is a lot of fixed cost being divided into a relatively small number of units. For instance "Ford Blue" is Ford's ICE division and in Q1 it moved about 626,000 units while "Ford Model e" is Ford's EV division and it only moved about 10,000 units in Q1. Source.
So if Ford Blue spends a Billion dollars that's a per vehicle cost of $1,597. If Ford Model e spends a Billion dollars its a per vehicle cost of $100,000.
So what would cost a Billion dollar? Well, how about 3 new battery factories plus an EV assembly factory that cost something like 7 Billion dollars?
That's not nearly all of it either. In May of 2021 Ford said that would spend something like 30 Billion by 2025 (that's next year!) to increase EV production.
So yeah, Ford has spent the GDP of some small countries shifting to EV production and when you divide those very large sums into a very small number of vehicles you get upside down real quick.
Agreed, and the proper response here is to increase volumes to amortize the costs across more units, not cut back production.
Unless your goal is to take a loss and write off your taxes for the construction costs of the new factories, only to increase production next year.
I think the problem for Ford is that they bet on economic improvements that didn’t manifest. Both their current EVs are “premium” models, and that market is tapped, especially with new car loans costing 8%, and people can’t afford housing and groceries and a car payment.
Lightly used MachEs sell well at $25k. Which tells you that there is a price point for a new Focus electric. F150s are work trucks, not status vehicles, so more XL trims and fewer platinums, or better yet electric mavericks and rangers.
They should make a Lincoln MK Lightning if they want the truck to stay premium, but aim Fords to the working class like always and price them accordingly.
I dont think it would be fair to call that a loss per vehicle then. When they built their first vehicles long long ago they also mustve been in the red for a while. Thats called "investing in company infrastructure" and not "selling at a loss".
The money is paid, the loss of money is over. Surely they are making a per vehicle profit already and it will just take some time to go overall positive for their investment.
It's common to break down the cost of Fixed Asset Investment to per unit produced by the investment. I won't comment on whether it's "fair" or not but it is common and it's how the article arrived at this eye popping "loss per vehicle" number.
This is why the incremental cost of a unit are often a better measure for longer term profitability and decision making than the unit average cost, especially when you aren't factoring in the market size and ability to repurpose sunk costs in that unit average cost.
Exactly, which is where the term "economies of scale" comes from.
More units = more economy
Ok i guess thats how it is, still weird because you rarely see a per product profit value in this sort of format. Seems like they enjoy crying over losses and staying silent over profits.
It's not in the actual report put out by Ford. It's a creation of the Journalist who wrote the article. So you are unhappy with Julian van der Merwe, the author of the article.
Lol, the dude is literally a neck beard.
Cowboy Bebop rocks tho
That's how accounting works. You don't get to change the federally mandated accounting practices.
It's called GAAP
https://www.investopedia.com/terms/g/gaap.asp
Ford has been mismanaged and only kept alive through BS, anticonsumer protectionist policies for decades at this point. It's my opinion that they genuinely don't even know how to run a successful business because "going under" hasn't been a real concern for them for longer than most of the executives have been at the company.
TOO BIG TO FAIL
What crack are you on? Ford makes money hand over foot making the best trucks for a while now. That's why they are alive despite a few (and I believe you're exaggerating) management missteps.
L M A (and I cannot stress this next part enough) O
This dude is just a Toyota fanboy. He literally said there is no reason to ever buy any other vehicle than a Toyota.
He also said that the manual Tacoma is more fuel efficient than the hybrid Maverick, so he's not the sharpest tool in the shed.
I honestly hate a lot of Toyotas and Japanese cars in general. Very sterile, boring, but their reliability and repairability is just a known fact, which is why I would only recommend the brand to people who only need a car as an appliance. I am an unapologetic fanboy of vintage Volvos though.
I said that I'd never recommend anything maker other than Toyota for a new car buyer, which I wouldn't. There are no other makers right now with as strong of offerings as Toyota left. Some makers have competitive models, but no brand has as solid of a reputation.
Also wrong about the second part, I said that the stick Tacoma was more fuel efficient than the automatic, which I'll admit is not the case anymore
Japanese cars were great in the 1990s, and phenomenal in the '80s, but now not so much. American automotive manufacturers have generally cut up with Japanese automakers in technology and reliability. Can be a lot more exciting too.
Ford sold 200,000 pickup trucks in Q1 2024 while Toyota sold 50,000 so those links alone do not tell the whole story. Those recalls are relatively small compared to Ford's market.
Also, Fords are typically easier and cheaper to buy and there are more service centers for them. This is also related to them being the most popular fleet vehicle. Don't get me wrong, I'd love to have a Toyota, but there's a reason why you pay more for the "Toyota tax".
Nobody ever said consumers were rational!
My neighbor purchased a used Toyota Tacoma a couple of years ago for $20,000. A 1999 model year.
Everyone has recalls when you are selling millions. Ford has average reliability while being the most capable truck and having the features the owners buy. The f150 has the best interior, infotainment, and has the best ride. It's the second best hauler only beaten by the ram.New car owners have warranties and fin not care about most recalls. They drop off the car, get a free rental, and come back the next day in most cases.
If you've ever even purchased a new vehicle, much less a new truck, you clearly are an edge case in how you rate trucks and have no clue what is going on in the head of most potential truck buyers.
Well which one is it? I've literally only seen suburban LARPers who can't even thread a ratchet strap buy or defend Ford trucks. I've spent decades of my life on construction job sites. You wanna know how to separate the serious career guys from the burnout cons? The smart ones are driving paid off Toyotas and the idiots have light duty domestics.
Most potential truck buyers are car buyers who get upsold on the lot.
👌👍
You clearly know nothing of the market and buyers nor a willingness to understand. You just want to lecture buyers who have different priorities and needs and don't religiously follow /r/personalfiances buy a used Toyota take.
You fundamentally have misunderstood why Ford is successful, run your mouth about it, and then argued that the buyers are idiots. 👏👏👏
Ah, yes, the American consumer. Famous for their great financial judgment and ability to live within their means.
Protectionist policies, corporate lobbying, hostage market, historical opposition to union labor, and outsourcing production to Mexico and China? I understand those reasons well.
You type like you're from Twitter (currently X) and I recommend you go back.
Try towing a 13,000 pound trailer across the country with a Taco.
I'll wait.