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Ford Authority

Ford Mustang Mach-E Is No Longer Profitable For The Blue Oval

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.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comments

  1. NateO

    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.

    Reply
    1. Steve Ketterer

      When government gets involved all bets are off.

      Reply
  2. David Dickinson

    The author is being too kind. Ford’s CFO stated that the costs of the MachE have increased a whopping $25,000 per car!

    Unless Ford baked in a ridiculous margin, this business model is going to fail

    Reply
  3. Michael

    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.

    Reply
  4. BADIH JOHN MAJDALANI

    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.

    Reply
  5. Bruce Holberg

    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.

    Reply
  6. John Coviello

    Trust me, once they made their “deal with the F^*^*^*^*^ing devil, Ford signed it’s own death certificate !!!!! Once they did that the entire world could have told them that the materials costs of batteries would increase and make EV’s unprofitable !!!!!!!!! Again, more stupid leadership !!!!!!!! The batteries should have been fully developed and safety tested BEFORE they were put in production vehicles. AND we are a very long ways from that ever happening.

    Reply
    1. Ficheh

      You mean like GM & the Bolt? I do agree that they should raise the price of the Mach-E so that they don’t lose money. I think it’ll still sell, maybe not in the quantities that’ll make it look like a winner against the Tesla, but since there are so many constraints on production for all the car makers, I think they’ll still sell every one that they can make. All these recalls by the legacy automakers (you know, the ones who know how to make cars and will “crush” Tesla when they bring out their EVs) sure make Tesla look like the EV winner that they currently are.

      Reply
  7. Francois

    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)..

    Reply
    1. Ficheh

      And I suppose that the Russian invasion of Ukraine is not the reason gas has gone up.

      Reply
  8. Dee Hart

    This might explain why more auto manufacturers that produce electric vehicles are now not allowing end-of-lease buyouts… The cars get recycled(?) and the previous owner has to buy or lease a new one. This is starting to be written into lease agreements. Tesla was the first and others have taken notice.

    Reply
    1. David Dickinson

      Great observation. EV prices are climbing so manufacturers want the old models back because the new ones are too expensive to manufacture. Will the manufacturer cannibalize the old cars and your “new” car is going to be a new type of hybrid–one with both new and recycled parts (probably the battery)? What exactly do they plan to do with the returned vehicles?

      Reply
  9. matt

    the EV ecosystem has NO, ZERO plans or technology to recycle the batteries in any meaningful let alone economic manner. It’s a huge disaster writ large. And Ford et. al. also want the gov’t to subsidize EV product by increasing “tax credits” (aka theft from everyone else) to knock a chunk off the otherwise “honest” MSRP.

    No, Ford, GM, VW, you deserve to suffer and die for pushing a technology that doesn’t have a prayer at any price point mere mortals can afford, in units that aren’t just boutique.

    The insanity of outlawing ICE in favor of EV will be repealed/rescinded as the tsunami of physics asserts it’s inescapable weight to economic reality.

    Reply
    1. maybeford

      Yup. Without a solid technology that can recycle batteries, EV is nothing but an environmental disaster waiting to happen.

      Reply
  10. Mike

    How can you make a profit, when you cannot even sell them?

    Reply
  11. Ron McKay

    “Deutch Band”?? Is the lead singer Dieter, formerly of “Sprockets”.

    Reply

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