Ford Motor Company experienced rising losses in the electric vehicle (EV) sector during the third quarter. These losses were primarily caused by reduced demand and the EV price competition initiated by Tesla earlier in the year.
According to InsideEVs, Ford sold 20,962 electric vehicles in Q3, slightly surpassing General Motors. The increased production of the Mustang Mach-E contributed to this success. Mach-E sales rose 42.5% during the quarter.
Overall, Ford’s EV unit saw a 44% increase in EV deliveries. This resulted in revenues of $1.8 billion, 26% higher than in Q3 2022.
However, Ford’s expenses also rose. In Q3, the EV unit reported an operating loss of $1.3 billion, more than twice its loss from the equivalent period last year.
This translates to a loss of approximately $36,000 per EV sold during Q3, surpassing the estimated loss of $32,350 per EV in the second quarter. Ford anticipates a full-year loss of $4.5 billion for its EV unit.
The fallout of the Q3 losses
Ford attributes the Q3 loss to ongoing investments in next-generation EVs and challenging market conditions. The company argues that North American customers are reluctant to embrace EVs because their upfront costs continue to be higher than the upfront costs for gasoline cars.
Consequently, Ford plans to scale back approximately $12 billion in planned EV investments in order to align with the pace of customer demand. This includes reducing production of the Mustang Mach-E (pictured above) and delaying the opening of one of its planned battery plants in Kentucky.
The company has not specified the length of the delay. However, the other battery plant in Kentucky and the Blue Oval City complex in Tennessee are still on track.
Many analysts are not persuaded by Ford’s explanation for its losses. With an exclusively EV lineup, Tesla was the second-most profitable car company in the world in 2022, trailing only Ferrari.
The United Auto Workers strike
As Ford lowers Mach-E production and delays its battery plant, it’s facing additional pressure from the recent United Auto Workers (UAW) strike.
Ford signed a tentative deal on October 29 to end the UAW strike, which lasted six weeks. This agreement includes a 25 percent wage hike for 57,000 workers spread out over five years.
According to Ford Chief Financial Officer John Lawler, this new contract is expected to increase labor costs by up to $900 per car.
The labor situation gives Tesla an advantage over Ford, as Tesla workers aren’t unionized.
Image Source: Mach E Club, https://shorturl.at/bEV19