Ford admits massive loss on EV sales

Ford admits massive loss on EV sales

Ford admits massive loss on EV sales 1024 630 Batteries International

May 3, 2024: Ford’s EV business has reported that losses soared in its first quarter to $1.32 billion, or $65,272 for every electric vehicle sold in the first three months of this year, according to analysis by industry commentator Robert Bryce.

The Detroit-based auto giant lost more money in its EV segment than it made in net profit over its entire business.

Given that Ford, with GM, has been a leader in EV production in the US, the knock-ons to lithium battery demand will, an anecdotal source told Batteries International, prove a quandary for Chinese cell manufacturers who have huge inventories stockpiled.

This will have massive implications for the future prospects of the lithium-based EV battery market with the lead battery sector also affected, though the impact there will be marginal.

One immediate change will be a strategy to reduce the price of EV batteries typically the highest outlay in EV manufacturing,

Executives at Ford said high production costs are contributing to the challenge. The company had already announced on April 4, a two-year delay in its plans to launch a new EV to take advantage of better battery chemistry and formats.

This “would substantially reduce the cost of the batteries for that vehicle,” said CEO Jim Farley: “We will do everything it takes to be profitable in the first 12 months of our vehicles.”

But the company also stated it would be reducing its expenditures in the EV segment to match “revised expectations” for the pace of EV adoption.

Farid Ahmed, VP of global strategy and business development at Ace Green Recycling, believes these operating losses on EVs will doubtless be affecting other major automakers in their EV offerings.

“There are two significant issues influencing the market right now,” he says. “The first is the enduring high cost of producing these vehicles. Besides the initial capital investment required for the launch of a new model, it is not helped by the price of raw materials stubbornly keeping battery prices high — a major component of the overall vehicle cost. 

“This could be a huge headache for automakers. If governments continue to compel the buying public to go down the route of having to buy EVs because the internal combustion engine (ICE) is banned, then the big car makers are facing a dilemma if they can’t make EVs profitably.”

Ford, like most car makers, plans to shift from traditional gas-powered vehicles to EVs in coming years but, to date, is the only traditional automaker to break out results of its retail EV sales. And the results show a concerning sign of the profit pressures faced.

“There is a waning appetite from buyers to make an EV their next car purchase,” Ahmed says. “The public, globally, is exhibiting increasing signs of rowing back from EV adoption for multiple reasons – affordability, infrastructure, charging times and range – and appear increasingly content to stick with ICE for the moment.”

This could have a positive impact on lead battery demand. “We know that ICE vehicles use lead batteries for starting, lighting and ignition, plus all the other electric toys we enjoy in modern cars,” says Ahmed. “And EVs will, for the vast majority, continue to use lead for their auxiliary batteries too. But these are usually around 60% smaller than those for the equivalent ICE vehicle because they don’t have to crank an engine, although some EVs have lead batteries just a big as their ICE counterparts.

“So, more sluggish EV sales will ripple through to higher lead consumption — but we’re talking about ripples, not tsunamis.”