Ford is Losing $22,000 Per EV Sold | Hacker News Reader

Ford is Losing $22,000 Per EV Sold

nextbigfuture.com

23 pointsgaryclarke2719 comments

To be clear, they are not losing $22,000 in incremental costs per unit sold. They are spending more in fixed costs like research and development than they are earning at present from all their EV sales. That lose is actually pretty low considering how new and limited their EV lines are right now.

That is difference between dumping and investment.

All tech companies invest.

Nobody is surprised when fresh technology (EV) requires upfront investment.

Title is misleading.

Admittedly I could be missing something but isn't this pretty sensationalist? Seems like an expected result of a big new venture that doesn't have time to faff about with scaling up slowly and is dumping money into large up front costs that can't be recovered by sales just yet.

But it seems a bit dubious to say that Ford, the company that could fairly claim that it invented modern mass production, is going to have the trouble scaling anything up. Comparing this to Tesla in 2017, by all rights a young company at the time that for years that suffered basic quality control issues while trying to scale, seems disingenuous, right?

This is just a straight clickbait version of the article* posted yesterday.

* https://news.ycombinator.com/item?id=35276024

I used to work there, and I saw some information that the cost of a hybrid powertrain was about $10k higher than the cost of the equivalent ICE vehicle. Not the cost to consumer, the cost to build. That, much like the article linked here, is only possible because of the absurd size of the federal CAFE subsidy for each "zero emission" vehicle. They lose 10 or 22 or whatever thousand dollars on each of these, but each one allows them to sell 10 more Lincoln Navigators at 11mpg for way more in profit each.

It's also worth noting that Ford and Ford dealers did more marking up during the recent round of car price increases than other OEMs/dealers, so they're likely to be getting squeezed pretty hard pretty soon. https://www.youtube.com/watch?v=aH1eoQz9g14

How much of this is because they're rolling the cost of retooling and building new factories into it? Once those factories are built and product starts rolling out I'd assume that the amount of money lost would decrease sharply.

You make it sound bad. "Customers are saving $22k per EV" is better

That said, EVs must be economically sustainable for everyone for society to reap the environmental gains. Otherwise switching from ICEs to EVs won't work.

Judging by the slides and graphs in the article, it looks like this is completely expected by Ford. They seem to be predicting an 8% margin by 2026 with a clear path way. It doesn't look like Ford is worried about it being sustainable for them in the long term.

This pretty much demonstrates that they are - at this point the upfront costs just haven't been outweighed yet because it's early in the sales process.

I thought I understood that the true environmental gains won't come from replacing every thermic vehicle with an electric one but from drastically reducing the number of vehicles available, hence how we consume mobility.

Looks like it's taking a small loss per unit in COGS terms, but the division is taking a large loss in development expenses. Not surprising or really concerning.

I am surprised by only 96,000 electric cars sold in 2022, though. I see electric Fords on the road all the time here and I'm not exactly in the jet set region.

Basically no analyst with even a little experience does the math the person in this article is doing for manufacturers (loss divided by units sold).

Manufacturers with new product lines USUALLY take losses like this until their fixed costs are spread over more units. *I mean, remember Tesla years 1 through 17?*.

Tesla was losing money when they were selling <100,000 cars per year, and now they've got a profit margin better than Porsche. A million per year seems to be the magic number, and Ford should hit that this year or next.

The headline seems to imply they're selling them at a loss, but aren't they really selling them at a profit and just haven't sold enough yet to cover their fixed costs like tooling?

Most of it is the R&D, but I’m sure tooling is in there, just likely a much smaller cost in comparison.

"haven't sold enough yet to cover their fixed costs" is just another way of saying they are selling at a loss. And no, they aren't selling them above the non-fixed costs either. To reach profitability, they need to do more than scale. They need to reduce battery costs and find design/engineering improvements. Those are actually provide more improvement to the profitability than scaling production up. The numbers are right there in the slides in the article.

Ford sold 96,000 electric cars in 2022 and made $5.3 billion in revenue. They had a net loss of about $2 billion.

As an aside, the amount of pop-ups and advertising makes this website almost unusable

You might consider this headline harmless clickbait, but it's also contributing to "the world has gone mad" hysteria that leads to people voting for Trump and other Facsists.

The actual article is fairly reasonable, so you could even say it's an ends justified the means thing, and that some other worse site would have got the click if this half decent site hadn't got their first, but it's all part of the same systemic issue.

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