The True Cost of Ford EVs

 

Would you buy one of these things? If you did, would you park it at your ex-wife’s house?

Ford has reported that it lost $132,000 per EV that it sold in the first quarter of 2024. Quite shocking. But when you dig a bit into the numbers, it is even worse.

Ford had expenses (technically EBIT) of $1.3 billion in its Model E division, which manufactures its plug-in electrics, but only revenue of $100 million. It costs Ford 13x as much to make an EV as it can sell the car for. In other words, the value of the resources that they consume to make an EV is 13x the value that a customer will get out of it over its service life. How is that environmentally sustainable? Fortunately, they only sold 10,000 of these resource-destroying EVs in QI.

Compare this to their Ford Blue division, which manufactures internal combustion and hybrid vehicles for consumers. They sold 626,000 in the first quarter with revenue of $21.8 billion. They had EBIT of $905 million. This means that customers value each ICE or hybrid car at $1446 more than the resources Ford consumes in producing it.

Ford Mustang Shelby Super Snake, a car that buyers actually want.

Their Ford Pro division (commercial vehicles) does even better. It sold 409,000 vehicles in QI for revenue of $18.0 billion and EBIT of $3.o billion. Ford adds value of $7335 per commercial vehicle that it produces.

I was surprised that Ford sold 1,035,000 ICE or hybrid vehicles, or 103x more than the EVs it sold. I thought that EVs made up a larger share of the market.

None of the other major automakers break out the results of their EV divisions. Huh.

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  1. ctlaw Coolidge
    ctlaw
    @ctlaw

    Your fire photo was a Chevy.

    • #1
  2. Percival Thatcher
    Percival
    @Percival

    Steve Fast: None of the other major automakers break out the results of their EV divisions. Huh.

    Yeah, it’s a mystery.

    • #2
  3. Steve Fast Member
    Steve Fast
    @SteveFast

    ctlaw (View Comment):

    Your fire photo was a Chevy.

    Oops. Oh well, they all look alike when charred, at least to my eye. I like that you put it in past tense, “was a Chevy.”

    • #3
  4. Doctor Robert Member
    Doctor Robert
    @DoctorRobert

    Steve Fast: Ford had expense (technically EBIT) of $1.3 billion in its Model E division, which manufactures its plug-in electrics, but only revenue of $100 million.

    Breathtaking numbers.  They should work for the government.

    Oh, come to think of it, they do.

    • #4
  5. JoelB Member
    JoelB
    @JoelB

    It would really be interesting if they separated the hybrids from the conventional ICE cars. I’m sure they have the numbers. This is the kind of thing government does not want you to know.

    • #5
  6. JoelB Member
    JoelB
    @JoelB

    What about ICE engines with big flywheels and CVT transmissions? Forget about the batteries.

    Why is nobody looking at this?

     The industry estimates the mass-production cost of a specific consumer-car flywheel system to be 2000 USD. For regular cars, this system has been shown to save 35% fuel in the U.S. Federal Test Procedure (FTP) drive cycle.

    • #6
  7. Mark Camp Member
    Mark Camp
    @MarkCamp

    The “E” in “EBIT” is for “earnings”. Not “expenses”.

    • #7
  8. Steve Fast Member
    Steve Fast
    @SteveFast

    Mark Camp (View Comment):

    The “E” in “EBIT” is for “earnings”. Not “expenses”.

    Yes, earnings before interest and taxes. It’s roughly equivalent to expense and more relevant to a division that does not borrow capital on its own account.

    • #8
  9. Steve Fast Member
    Steve Fast
    @SteveFast

    Another stark way to put it – selling 10,000 EVs destroyed a third of the profit created by selling 1.04 million ICE and hybrid vehicles.

    Ford forecasts that it will lose $5.0-5.5 billion on EVs for the full year, so it doesn’t see any change before the end of the year.

    A corporation might do that for a few years if it thinks that EVs will eventually be profitable. But there is a clock ticking on EVs. They have to become profitable and stop burning billions in profit in the near future or their manufacture will be shut down.

    • #9
  10. E. Kent Golding Moderator
    E. Kent Golding
    @EKentGolding

    EVs are almost purely a government push,  rather than a customer pull.  Rebates, tax incentives,  and fuel economy and emission regulations designed to make ICE vehicles untenable.   All in the service of a left wing religious faith.

    Unfortunately,  those is charge of Ford and GM fully buy into left wing polytheism.

    There are actual customers who want hybrids, however.  Hybrids make economic sense.

    • #10
  11. Chowderhead Coolidge
    Chowderhead
    @Podunk

    JoelB (View Comment):

    What about ICE engines with big flywheels and CVT transmissions? Forget about the batteries.

    Why is nobody looking at this?

    The energy transfer is vastly more efficient than electric motor regeneration. I’ve always thought if you use a manufactured battery pack for an EV as the flywheel you would have a zero net gain in weight. As an ICE you would have a lot of added weight. That is unless you spun the fuel tank.

    None of this will work for any car anyway. You have to fight the gyroscopic effect on every turn wasting energy. Its fantastic for a ship, but a car not so much. Try driving something like that on an icy road.

    • #11
  12. Tex929rr Coolidge
    Tex929rr
    @Tex929rr

    I find it bewildering.  These auto companies have enormous engineering, market research, and accounting assets to bring to their analysis of the markets.  And they doubled down hard onto a clearly unsustainable path.  Then again, GM built the Aztek, thereby proving how tone deaf decision by committee can be. I’m pretty sure I read about the Toyota CEO coming out a year or two ago and saying they were committed to hybrids but were not interested in EV’s.  So someone gets it.

    The most annoying thing is we already have hybrid vehicles that save a lot of fuel and don’t impact the grid.   I guess it’s not enough until we are using draft horses. 

    • #12
  13. Stad Coolidge
    Stad
    @Stad

    Steve Fast: Ford has reported that it lost $132,000 per EV that it sold in the first quarter of 2024.

    Reminds me of that old bit, “We lose money on everything we sell, so how do we make a profit?  Volume, volume, volume!”

    • #13
  14. Ekosj Member
    Ekosj
    @Ekosj

    As recently as May 2023 …

    “Ford believes its Model e division will achieve an 8% operating margin by the end of 2026”

    That projection is based on a 2 MILLION EV vehicle run rate in 2026.  That’s going to quite the growth ramp up from this quarter’s 20,000 EV units sold.

    • #14
  15. Ekosj Member
    Ekosj
    @Ekosj

    Here’s the way the EV boosters reported the news…

    “Ford Motor Company reported 181,274 new vehicle sales in March (up 5.4% year-over-year) and 508,083 in the first quarter (up 6.8%). This overall growth was accompanied by a surge in all-electric vehicle sales.”

    “Ford BEV sales last month (YOY change):

    • Ford Mustang Mach-E: 5,364 (up 437%)
    • Ford F-150 Lightning: 2,907 (up 321%)”
    • Ford E-Transit: 910 (up 124%)
    • Total: 9,181 (up 338%) and 5.3% share”

    As usual with the Left, it’s the truth and nothing but the truth.   But it’s not the whole truth.

    • #15
  16. Ekosj Member
    Ekosj
    @Ekosj

    Stad (View Comment):

    Steve Fast: Ford has reported that it lost $132,000 per EV that it sold in the first quarter of 2024.

    Reminds me of that old bit, “We lose money on everything we sell, so how do we make a profit? Volume, volume, volume!”

    To be fair, lots of that loss is amortizing the costs of the new EV production facilities.   So if they somehow did manage a 100X increase in production and sales the per-unit slice of those costs becomes much smaller.

    • #16
  17. Ekosj Member
    Ekosj
    @Ekosj

    “Ford expects a loss of 5.0 to 5.5 billion dollars for its EV division for the year as a whole. The latter already posted a loss of USD 4.7 billion for the full year 2023”

    10 Billion dollars down the tubes.

    • #17
  18. Ekosj Member
    Ekosj
    @Ekosj

    Also under, to be fair, I parked next to  Mach-E (the EV Mustang)  and it was gorgeous.   For someone with a pile of money, garage space for the at-home charger, short commutes /errands, and a second car for long outings or towing or winter…it’d be an attractive option.   But are their 2MM of those people a year stepping up for a Ford EV?    Hard to imagine.

    • #18
  19. Mark Camp Member
    Mark Camp
    @MarkCamp

    Steve Fast (View Comment)

    Yes, earnings before interest and taxes. It’s roughly equivalent to expense and more relevant to a division that does not borrow capital on its own account.

    You have the relationship backward.

    EBIT is revenue minus expense and other costs.  Not plus.

    So it is not roughly equivalent to expense.

    • #19
  20. Ekosj Member
    Ekosj
    @Ekosj

    Mark Camp (View Comment):

    Steve Fast (View Comment)

    Yes, earnings before interest and taxes. It’s roughly equivalent to expense and more relevant to a division that does not borrow capital on its own account.

    You have the relationship backward.

    EBIT is revenue minus expense and other costs. Not plus.

    So it is not roughly equivalent to expense.

    As Revenues approach zero, EBIT approaches Expenses   (Earnings will be a negative number) 

    • #20
  21. The Scarecrow Thatcher
    The Scarecrow
    @TheScarecrow

    E. Kent Golding (View Comment):

    EVs are almost purely a government push, rather than a customer pull.

    Sounds like the vaccinations.

    • #21
  22. The Scarecrow Thatcher
    The Scarecrow
    @TheScarecrow

    Ekosj (View Comment):

    “Ford expects a loss of 5.0 to 5.5 billion dollars for its EV division for the year as a whole. The latter already posted a loss of USD 4.7 billion for the full year 2023”

    10 Billion dollars down the tubes.

    Sounds like Ukraine. (If ONLY it was only 10 billion ….)

    • #22
  23. Ekosj Member
    Ekosj
    @Ekosj

    Tex929rr (View Comment):

    I find it bewildering. These auto companies have enormous engineering, market research, and accounting assets to bring to their analysis of the markets. And they doubled down hard onto a clearly unsustainable path. Then again, GM built the Aztek, thereby proving how tone deaf decision by committee can be. I’m pretty sure I read about the Toyota CEO coming out a year or two ago and saying they were committed to hybrids but were not interested in EV’s. So someone gets it.

    The most annoying thing is we already have hybrid vehicles that save a lot of fuel and don’t impact the grid. I guess it’s not enough until we are using draft horses.

    IMO the Aztek was a game-changing vehicle that actually ushered in the whole ‘crossover’ category.

    • #23
  24. Ekosj Member
    Ekosj
    @Ekosj

    deleted duplicate

     

    • #24
  25. Ekosj Member
    Ekosj
    @Ekosj

    The Scarecrow (View Comment):

    Ekosj (View Comment):

    “Ford expects a loss of 5.0 to 5.5 billion dollars for its EV division for the year as a whole. The latter already posted a loss of USD 4.7 billion for the full year 2023”

    10 Billion dollars down the tubes.

    Sounds like Ukraine. (If ONLY it was only 10 billion ….)

    Actually not like Ukraine at all…but that’s a separate issue.

    • #25
  26. Mark Camp Member
    Mark Camp
    @MarkCamp

    Ekosj (View Comment):

    Mark Camp (View Comment):

    Steve Fast (View Comment)

    Yes, earnings before interest and taxes. It’s roughly equivalent to expense and more relevant to a division that does not borrow capital on its own account.

    You have the relationship backward.

    EBIT is revenue minus expense and other costs. Not plus.

    So it is not roughly equivalent to expense.

    As Revenues approach zero, EBIT approaches Expenses (Earnings will be a negative number)

    Exactly!  So EBIT and expenses are exact opposites at that limit. Not equivalent.

    That’s what Steve had backward.

    • #26
  27. Joker Member
    Joker
    @Joker

    Maybe the biggest expense involved in the boondoggle rush to EVs is the (eventual) abandonment of all the productive innovations that have been made in the internal combustion realm.

    We’ve gone from leaky, unreliable, 20 hp, inefficient engines that tapped out at 30 miles per hour to an incredible array of consumer options that get 50 mpg or deliver the kind of horsepower that dragsters ran on a generation ago. And at every level they produce less emissions and particulate matter. 

    When I was a high schooler getting, a vehicle with 50K miles didn’t have far to go. A car needed tires and brakes before 20K miles, tune ups were every few thousand miles and the more you needed a tune up the more noxious the exhaust and frustrating the performance. Nobody would buy a car with 100K miles on it. Today, its not crazy to get 200K miles out of a budget ride with nowhere near the constant maintenance and I believe that a longer lasting car is a form of earth friendly.

    Auto manufacturers around the world have a sunk cost in the trillions of dollars perfecting the ICE for consumers and with the stroke of an idiot’s pen, manufacturers are supposed to abandon all that successful innovation for more expensive, less reliable shorter lived cars with questionable pollution advantages. 

    I doubt the PRC will be imposing EV mandates anytime soon. Because they’re not ready.

    • #27
  28. Tex929rr Coolidge
    Tex929rr
    @Tex929rr

    Ekosj (View Comment):

    Tex929rr (View Comment):

    I find it bewildering. These auto companies have enormous engineering, market research, and accounting assets to bring to their analysis of the markets. And they doubled down hard onto a clearly unsustainable path. Then again, GM built the Aztek, thereby proving how tone deaf decision by committee can be. 

    IMO the Aztek was a game-changing vehicle that actually ushered in the whole ‘crossover’ category.

    I think that’s debatable.  Subaru was deep into that type of design already and the mini SUV’s like the CRV and RAV 4 would shortly morph into crossovers. GM had to force managers to use the Aztek as their take home car because so many were unsold.  Even it was ahead of the curve it wasn’t a sales success. 

    • #28
  29. Lunchbox Gerald Coolidge
    Lunchbox Gerald
    @Jose

    There is a good article this morning by Eric Peters (always worth reading) about Tesla making money selling carbon credits to other car manufacturers.  That scheme is played out.  Or is it? 

    His electric vehicle (EV) operation — which allowed car manufacturers to “offset” their carbon footprints by purchasing “credits” from Elon in lieu of making EVs themselves — had been priced with the expectation that the government would make a “market” for battery powered vehicles.

    • #29
  30. philo Member
    philo
    @philo

    It seems the universal acceptance of the 2010 [2009] Auto Bailout model (along with the associated executive bonuses) now trumps what fiduciary duty used to bring for business credibility. It will be interesting to see the revised analyses once those numbers are known and figured in.

    • #30
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