In March 2022, Ford made a resounding announcement: it was splitting the company in two to face the transformation to electric cars. In the words of Jim Farley, its CEO, it was “the biggest transformation in the company’s life.” A decision to which it was going to dedicate 50 billion dollars (45 billion euros) until 2026.
As a result, Ford Model e was born, a division dedicated exclusively to electric cars and software development. On the other hand, there was Ford Blue, which, like a seesaw, would support most of the accounts of the start-up company, gradually balancing the scales in the coming years.
The goal was clear: to catch Tesla. And along the way, the strategy was risky. As they reported at the time in The New York Timesconfidence in some of its cars and their ability to surpass Elon Musk’s product was at its peak. Regarding the F-150 Lightning (the fully electric version of the famous pick-up truck), Farley said that it had to deliver good results because “the whole company was at stake.”
Less enthusiasm and million-dollar losses
Over time, however, things have cooled at Ford. At least when it comes to the numbers.
Although Jim Farley has stood firm While defending the switch to electric cars, the truth is that sales of this type of vehicle in the United States, its main market, are suffering. And that does not help to balance the seesaw that keeps the two parts of the company (Ford Blue and Ford Model e) in the air, something essential to balance Ford’s accounts.
The latest financial results have once again demonstrated the problems that Ford Model e is experiencing, its division dedicated exclusively to electric cars, which is, for the moment, the smallest in the company, as they recall in Electrive.
In the second quarter, Ford sold just 26,000 fully electric units. This is a very small figure compared to the 741,000 vehicles with combustion engines that it put on the road, but it is also particularly problematic if we take into account that it reflects a 26% drop compared to the same period last year.
A drop in sales that has had a direct impact on the division’s bottom line. In the second quarter, Ford lost $1.1 billion on its electric cars and maintains its forecast for the end of the year: losing $5 billion in this division.
Broadening our focus, in the first six months of the year, Ford has sold 22% fewer vehicles and has earned $1.3 billion in sales revenue, half of what it earned in the same period in 2023. In total, the company claims to have lost $2.46 billion between January 1 and June 30.
The biggest problem Ford says it faces is that, despite having cut the costs of its electric models by $400 million, lowering prices to encourage electric car sales has left the wound still bleeding. On the day of the announcement, Ford shares fell more than 18%.
Sales of this type of car in the United States are growing at a very very low rate. Farley himself encouraged this market to “fall in love again” of smaller cars, while saying that in two and a half years they should launch a $30,000 electric car that is profitable on its own.
The electric car is facing a range problem in the United States. There is a lack of high-power (and reliable) charging points in a country where distances are enormous. Here, Tesla is one step ahead, with its own and more reliable charging network. So much so that it has pushed the rest of the manufacturers to adapt to its standard, including Ford, which was the first company to join.
In a country where drivers have given in to huge cars, the electric car cannot compete at the moment because, for the same size, it loses out by far in price. And in addition, in recent months, there is a growing trend sharpening the political burden that revolves around the electric car.
Photo | Ford
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