Dive Brief:
- Ford lost $1.1 billion on its Model e electric vehicle division in Q2, consistent with its $1.1 billion loss a year ago, according to its earnings report released Wednesday.
- Revenue for the electric vehicle segment was down 37% during the quarter due to lower volumes and industry-wide pricing pressure, the automaker said.
- Ford CEO Jim Farley, who called the EV journey “humbling,” reasserted the company’s choice to be transparent about its EV losses during an earnings call. He said it forces accountability and makes the team more “strappy and resourceful” to turn the business around.
Dive Insight:
Ford’s total loss on Model e for the first half of 2024 was $2.5 billion, according to the report. It expects to lose between $5 billion and $5.5 billion for the full year.
The automaker’s continued EV losses nearly canceled out $1.2 billion in Q2 profit from its Blue division, which represents internal combustion engine vehicles.
Farley said during the call that when it comes to EVs and ICEs, the “math is completely different.”
“In ICE, the business we've been in for 120 years, the bigger the vehicle, the higher the margin,” Farley said. “But it's exactly the opposite for EVs; the larger the vehicle, the bigger the battery, the more pressure on margin because customers will not pay a premium for those larger batteries.”
Despite the ongoing challenges, Farley said Ford remains confident that it can reduce losses and sustain a profitable EV business.
Thanks, in part, to its skunkworks team dedicated to developing lower-cost EVs, CFO John Lawler said the company managed $400 million in savings for Model e during the quarter with reductions in material costs, improved battery economics and lower engineering.
“That team is unique for a traditional OEM, the talent on that team. They're doing an agile waterfall systems integrated design process, which no other global OEM has done, a traditional OEM. And we're really working that to be focused on what can happen from a tech standpoint as well,” Lawler said during the call.
Ford has been pulling back on its EV transition plans as it works to drive down costs. Last week, Ford announced it will invest $2.3 billion to build F-Series Super Duty pickups at its Oakville Assembly Complex in Ontario, Canada. The automaker previously announced plans to convert the facility into an EV manufacturing complex.
