Bidenomics Impact: Ford Trims Battery Orders as EV Losses Near $100,000

Ford Reduces Battery Orders Amid Slowing EV Market

Despite constant support from American taxpayers, the electric vehicle (EV) market is showing signs of slowing down, with Ford trimming its battery orders. This move is aimed at mitigating losses from electric vehicles as the automaker scales back its EV strategy in the face of a decelerating plug-in market, according to insiders who spoke to Bloomberg.

Company Statements

Ford CEO Jim Farley has admitted that the company's EV unit is currently the biggest burden on the company. However, CAT reassured that its cooperation with Ford is proceeding as usual. When asked to comment on its relationship with suppliers, Ford chose to remain silent.

Increasing Losses and Weakening Demand

Bloomberg highlighted that with the falling prices of EVs and a weakening demand, Ford's losses per electric vehicle surpassed $100,000 in the first quarter, which is double the deficit of the previous year. Bloomberg Intelligence predicts that Ford's anticipated EV unit losses this year will almost cancel out the profits from its Ford Blue division, the producer of traditional internal combustion engine vehicles like the Bronco SUV and gas-electric hybrids like the Maverick truck. This has led BI analysts to question the wisdom of heavy investment in EVs.

Challenges in the Industry

The reduction in Ford's orders underscores the challenges faced by the industry as US automakers are confronted with lower-than-expected EV demand and battery manufacturers in South Korea, China, and other countries grapple with unsold inventory. This situation has impacted the prices of crucial metals such as lithium, cobalt, and nickel, causing them to hit multiyear lows and stalling new projects. Despite reducing EV production costs, Ford had to slash prices to remain competitive with Tesla.

Statements from Ford CFO

John Lawler, Ford's CFO, stated in April that the prices have been dropping quite dramatically, which is why the company has been struggling to keep up from a cost reduction standpoint. He added that they are aiming to cut as much cost as possible this year on Model e with the ultimate goal of making it profitable and ensuring a return on the capital invested.

Reasons for Ford's EV Investment Cutback

It is not surprising to see Ford cutting back on its EV investments. A recent report from the Epoch Times revealed that Ford lost $132,000 on each of its 10,000 electric vehicles sold in the first quarter of 2024, according to CNN. The sales were down by 20% from the first quarter of 2023 and were expected to drag down the company's overall earnings. These losses include the hundreds of millions being spent on research and development for Ford's next generation of EVs, which are years away from yielding returns. Ford is the only major automaker that separately reports EV numbers, but it's likely that other brands are experiencing similar losses.

Closing Thoughts

The current state of the EV market raises several questions about the future of the industry and the viability of heavy investments in EV technology. What are your thoughts on this? Do you believe the EV market will bounce back, or is this a sign of a long-term slowdown? Share this article with your friends and let us know your thoughts. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6 pm.