Ford loses US$58,333 per EV by design as it cuts Mach-E prices and intends to keep Apple CarPlay support
Ford reported its quarterly earnings by division for the first time and all units but one notched stellar financial performance. Ford's automotive revenue was US$39.09 billion, slightly above analyst expectations, while its gas-powered car business Ford Blue earned $2.6 billion and the commercial fleet in the Ford Pro division added another $1.4 billion in profits for the quarter.
The big outlier? Ford's newly minted Model E division that lost $722 million in the January-March period, nearly double its year-on-year Q1 loss. Given the number of electric vehicles it sold in the first quarter, that's $58,333 of loss for every F-150 Lightning, Mustang Mach-E, or electric Transit that got off Ford's conveyor belts in that period.
Ford, however, is nonplussed, and said that it is running the electric vehicle division like a startup, not expecting it to turn a profit before 2026. For this fiscal year alone, Ford expects the Model E business to lose about $3 billion as its EV production ramps up, and the introduction of new models in the portfolio accelerates. Unlike General Motors, however, Ford seemingly doesn't intend to nickel and dime its customers going forward, and said that it will keep the support for third-party infotainment systems like Apple CarPlay or Android Auto in its vehicles.
Ford is also one of the few automakers that took Tesla's price war by heart and just lowered the price of the Mustang Mach-E for the second time with up to $4,000. "It’s a competitive segment, and we’re working on cost reductions," said Ford's chief finance officer John Lawler. He added that Ford has found ways to lower the production costs of its electric vehicle by $5,000 on average, as it switches to the cheaper LFP battery chemistry that Tesla uses in its base Model 3 and Model Y.
Ford will be building a huge LFP battery factory in the US with the help of China's CATL which will provide the technology and equipment installation. This may qualify both its made-in-US battery cells, and the future EVs built with them, for federal subsidies. Those billions in government tax credits would be another income stream that could help bring the Model E division to an 8% profit margin by the end of 2026, as per the goals set by Ford.