Back in March, Ford CFO John Lawler admitted that the automaker’s all-electric vehicles wouldn’t be profitable until the second generation arrived, but the Ford Mustang Mach-E proved to be an exception to that rule early on with the EV crossover was turning a profit from the day it launched, as Ford Authority reported last September. In the months since, The Blue Oval has been able to find additional cost savings in the Ford Mustang Mach-E, but rising materials costs have mitigated those margins, as Lawler admitted while speaking at the recent 2022 Deutsche Band Global Auto Industry Conference.
“Yeah. So, we had talked about when we launched the Mach-E, it being contribution margin positive and we actually had a positive bottom line profit when we launched the Mach-E,” Lawler said. “Commodity cost has wiped that out so, from a bottom line standpoint.”
Over the past few months, a number of Ford’s suppliers – including EV battery maker CATL and Bosch – have announced that they will be raising prices as the cost of raw materials continues to skyrocket. In fact, EV battery costs alone are expected to rise as much as 40 percent over the next two years, which recently led to Ford’s stock being downgraded by Wells Fargo analysts.
There are a few ways that Ford plans to at least somewhat mitigate these exploding costs, however. For starters, CEO Jim Farley recently admitted that the automaker is exploring the idea of vertically integrating raw materials into its business, while it’s also looking at switching from lithium-ion batteries to cheaper lithium iron-phosphate units. On a broader scale, the U.S. Department of State also just announced that it has entered into a Minerals Security Partnership with key partner countries designed to keep the supply chain flowing smoothly moving forward, which could help bring prices back down as well.
We’ll have more on the Mach-E soon, so be sure and subscribe to Ford Authority for more Mustang Mach-E news and ongoing Ford news coverage.
Comments
If a product isn’t profitable raise the price to where it is. If no one buys it, then make something they will buy for a price you can still make a profit on. If you expect to run a successful business you have make a product that people not only want but are willing to pay more for than it cost. It isn’t bragging rights to sell a car for a better price than someone else if its costing you more to build it. I’m not a fan of tesla cars but their business model is sound. Make a simple vehicle, call simple luxury, sell simple for the price of luxury, and add a big screen to make it convincing. Bingo!!! 25% profit margins.
The Mach-E program just got more costly, with the recent recall, that will eventually require physical corrections, instead of over the air simple fixes, especially after class action lawsuits are launched.
Sedans were discontinued because Ford claimed they were unprofitable. Now they admit this vehicle is unprofitable, the overheated batteries recall of this vehicle will only increase its unprofitability. However, since it’s a CUV, they’ll keep making it, profit or not.
If Ford gets to the point where they can’t make a profit on their EVs, it will tank the company. They don’t have the luxury of selling carbon credits as Tesla does. According to some articles, Tesla makes more profit on that than they do their cars.
As mentioned. That’s what happens when the government idiots stick their nose where it doesn’t belong. If any of you are wondering why the gas prices are so high–> Simple supply and demand.
Biden and his band of mental midgets outlawed 2.0 million barrels of American oil a day out of existence, wrecking the oil industry on purpose, trying to force our hands into buying electric cars.
Their glaring 200% lack of foresight is in full display now. The surging oil prices affect everything since all you touch is delivered by trucks / trains / ships burning diesel. That combined with flooding the market with trillions of unnecessary “Covid response” money (that really was an attempt to buy votes) has supercharged a worse in 40 years inflation.
Bottom line on the topic at hand: EV’s were not affordable for regular folks before and they will get far less affordable going forward as the costs rise fueled by the current out of control inflation.
You give enough rope to a bunch of (Government) fools—> They’ll hang themselves (And us)..
We are gonna need receipts for that buddy.
You are going to have a hard time arguing the spike of gas prices is not Biden and his admins fault.
You are either an idiot or complicit in the communist takeover.Hopefully a complicit intellectual as those are the first eliminated.Fool
If you ever read or listen to something other a MSM outlet, then you might actually know something. But you don’t, so you come up with some absolutely ridiculous and easily debunked items. I am glad that so many people in these forums are much smarter and more knowledgeable than you.
And I suppose that the Russian invasion of Ukraine is not the reason gas has gone up.
How can you make a profit, when you cannot even sell them?
“Deutch Band”?? Is the lead singer Dieter, formerly of “Sprockets”.