Ford Expects $3 Billion Loss from EV Segment in 2023
Ford announced on Wednesday that it is once again reducing prices on its battery-electric crossover, the Mustang Mach-E, by up to $4,000 USD.
This move comes as an electric vehicle (EV) price war appears to be brewing, with the Dearborn automaker responding to aggressive price cuts by EV market leader Tesla. The lowest-priced model, the select rear-wheel-drive standard range, will now be available for $42,995, down from $45,995 USD, while the highest-priced model, the GT all-wheel-drive extended range, will drop to $59,995 from $63,995 USD, reports The Detroit News.
Tesla’s recent price cuts, which aimed to increase sales volumes while sacrificing some profit margins, prompted Ford to follow suit with reduced prices on the Mach-E, which competes directly with Tesla’s Model Y. “Our competitors are also adjusting their prices,” said Marin Gjaja, Chief Customer Officer for Model e, Ford’s EV unit. “As we look and want to stay competitive in the marketplace, we’re having to respond.”
While some capital markets analysts deemed the previous reduction in the Mach-E’s pricing necessary for remaining competitive, others expressed skepticism, given that Ford is currently losing money on its EV business. However, Ford executives have noted that increasing production volumes of the Mach-E is driving cost reductions, thus enabling the price cuts.
Ford’s Mexico-based Mach-E assembly plant recently underwent a series of upgrades to facilitate production ramp-up in the second half of the year. The automaker is working towards a global run rate of 600,000 EVs annually by the end of this year and 2 million by the end of 2026, as part of its $50 billion electrification strategy.
Ford has also introduced several improvements to the Mach-E, such as increased battery range for standard-range models, a targeted EPA-estimated range of 250 miles for rear-wheel drive, and 226 miles for all-wheel drive.
Gjaja highlighted these enhancements, stating, “We continue to find ways to improve the value of the Mustang Mach-E. Upgraded BlueCruise rolling out for new and existing Mustang Mach-E owners, increased range, and faster DC charging times on standard range models show how we are relentlessly improving our products for our customers.”
The Mach-E now qualifies for potential Inflation Reduction Act tax credits of $3,750 this year, further increasing its appeal to consumers.
Ford’s EV Segment Expects $3 Billion Loss in 2023
Ford also just announced its first quarter earnings. The company’s electric division, known as Model 3, lost $722 million in Q1. The company says it expects to lose roughly $3 billion from its EV operations in 2023.
The company sold 12,000 EVs globally in Q1 of 2023, down 33% year-over-year. Ford is losing money on every EV sold.
Despite EV losses, Ford’s regular auto businesses (Ford Pro commercial fleets and Ford Blue consumer division) helped the company generate $4 billion in earnings. Ford’s net income came in at $1.8 billion, as revenue grew 20% year-over-year.