Ford has cut back its F150 Lightning electric truck sales target in 2024 from 160,000 to about 80,000. It is estimated that Ford loses $36,000 to 60,000 USD on every EV it sells. The scaled back plans would reduce annual losses in the EV division by $2.5 to 5 billion. Ford has also postponed about $12 billion in EV investment. However, CFO John Lawler said that Ford is not moving away from its second generation EV products. The line-up will include two brand-new SUVs, an all-electric Puma, and four electrified Transit vans.
Is Ford’s EV future doomed?
Ford’s original plan was to produce 3,200 electric Ford F-150s a week in 2024, but now plans to produce 1,600. This is a major reversal after the automaker increased plant capacity for EVs in 2023.
F-150 Lightning sales increased to 4,400 sold in November. Ford only sold 20,365 of the EV trucks this year through November, up 54% from a year earlier.
Ford Model e, the electric-vehicle business unit, lost $1.3 billion on an operating basis in the period. The EV losses doubled from 2022 despite a 26% increase in revenue. Through the first three quarters of 2023, Model e posted an operating loss of about $3.1 billion, on track with Ford’s previous guidance calling for a full-year operating loss of $4.5 billion for the Model e business unit. Ford losses will increase with the new UAW deal that increases worker costs by $2-3 billion per year.
The continued expansion from 25,000 EV trucks to 80,000 will still increase losses but far lower losses than an expansion to 160, EV trucks.
Ford’s EV division will probably still lose $6-7 billion in 2024 but it would not be $8-10 billion. Ford had about $26 billion in profit for the 12 months from Q4 2022 to Q3 2023. The $3-4 billion in EV division losses were offset by nearly $30 billion in gas suv and truck profits. In 2024, Ford will have a $3 billion union (UAW) hit and say $7 billion from the EV business. This would be about $20 billion in profit if the gas SUV and truck business holds up in the new slower plan. The old plan would have seen perhaps $5 billion in more EV losses and $5 billion in cash going to new factories. Ford would still have had about $15 billion in profit.
Ford is now hoping that battery and design cost reductions can be made and that they can make meaningful numbers of EVs in 2027-2029 while actually working and learning about EVs at larger scale.
Ford expected to have the capacity to build EVs at a rate of 2 million per year by the end of 2026. That alone will provide roughly 20 points of margin improvement. However, this will get delayed.
Ford wants designs for ultra-high simplicity of manufacturing and platforms that maximize commonality and reuse which will yield another 15 points of margin improvement. The design efforts could still continue.
Ford wants to shift to iron LFP batteries and was trying to get joint venture US factory with China Battery maker, CATL. However, the CATL factory. The White House does not want the EV tax and battery tax credits to go to a chinese company. This is part of the delay and cancelation of $12 billion in EV investments and factories.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.
That’s because pure EVs still have limited utility on range, vehicle size, climate reliability, availability/ease of personal chargers, and model choice. Early adopters and earth-savers with money, have exhausted -we have plateau and finally: niche.
I would be completely happy with a 100 mile electric/ 350 mile ICE (gas or future H2) PHEV combo in a mid-size+ SUV as being the best of all worlds. Since the majority of people no longer live in ‘owned’ single-family housing and that is likely to decline, EV is becoming more an ‘unacceptable’ compromise until we get 400 mile range and 5 minute 80% charging in a mid-size SUV for less than $60k with repair reliability that costs less than 25% of the vehicle over 15 years/ 200k miles. My chief concern is reliability of all the PHEV components and repair costs for such complexity, if any. My second concern is performance – speed, comfort, acceleration, towing. It will be interesting to see how the industry develops, how it chooses models to release, and what non-ICE regulations stick post-2030 (a lot closer than one thinks).
Talking about costs and profitability of car manufacturers: Brian when are you going to cover the news that tesla is going to recall 2 million cars (out of 5 million produced worldwide)?
Looks like the recall fix is going to be via a software update. That’s not 0 cost, but it’s as close as makes no difference.
Brian, we have some major LK99 news
Korean academic society says controversial superconductor LK-99 ‘groundless’
https://en.yna.co.kr/view/AEN20231213003200320?section=economy-finance/health