In the first quarter of the year, Ford’s Model e electric vehicle segment faced a loss of 1.3 billion USD, translating to 132,000 USD for each car sold. Despite selling only 10,000 electric vehicles in the first quarter, a 20% decrease from the previous year, revenue from this segment decreased by 84% to just 100 million USD due to a price war in the industry.
Ford CEO Jim Farley stated that the company is making changes in the electric vehicle segment to potentially achieve profitability with the next generation of cars. John Lawler, Ford’s Chief Financial Officer, mentioned that the price war among electric vehicle manufacturers has been ongoing for nearly two years, making it challenging to achieve profits. The intense competition has led to significant losses before taxes.
Unlike other traditional car manufacturers who disclose results only for their entire business or specific models, Ford is transparent and reports results specifically for its electric vehicle segment. This highlights the immense profit pressure on this segment. Last year, Ford reported a loss of 4.7 billion USD in its Model e segment with over 116,00 units sold.
Although not all electric vehicles sold by Ford fall under the Model e segment, Ford Pro handles high-volume sales to business and government customers. The demand for electric vehicles in the Ford Pro segment is substantial with recent orders for electric vehicles like E-Transit and F-150 Lightning showing promise. However, despite being an essential part of Ford’s portfolio, Ford Pro mainly focuses on selling gasoline cars and witnessed more than double pre-tax profit in the last quarter with an increase in revenue and units sold.
On the contrary, Ford Blue which sells gasoline cars to consumers experienced a decline in revenue and units sold along with a profit of $905 million USD last quarter. Competitors like General Motors and Stellantis have reported positive business results in their respective electric vehicle segments indicating varying success across different brands within one industry. Tesla reported a decrease in profits and revenue in the first quarter of this year due to market forces beyond their control.
In conclusion, while transitioning from gasoline cars to electric cars remains challenging for traditional car manufacturers like Ford due to intense competition and market forces beyond their control; there are opportunities for growth within specific segments such as high-volume sales through business customers or specialized models catering to niche markets like commercial trucks or luxury SUVs which may offer potential avenues towards achieving profitability while navigating these challenges effectively.