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Ford EV Contribution Margin Will Not Be Breakeven This Year

Ford has been quite clear from the start that it doesn’t expect its all-electric vehicles to become profitable until 2026, which is when the automaker’s second-generation models are slated to launch. However, many were still taken aback when The Blue Oval’s Model e EV division lost a whopping $2 billion last year, and after losing another $1.08 billion in Q2, it’s also expected to post total losses of around $3 billion this year. This topic was once again something that CEO Jim Farley addressed when speaking during the automaker’s Q2 earnings call, reiterating that Model e isn’t expected to break even this year – let alone turn a profit.

2023 Ford F-150 Lightning XLT - Exterior 001 - Front Three Quarters

“Now turning to Model e, revenue increased 39 percent year-over-year and more than doubled significantly as we added capacity for both Mach-E and the F-150 Lightning. Contribution margin and EBIT margin were both negative as pricing and volume pressures intensified, and that’s impacting all OEMs. Given the rapid and dynamic changes in the pricing environment, we no longer expect to achieve contribution margin breakeven for our Gen 1 products this year.”

This comes as no surprise, given the fact that EV inventory has expanded significantly in recent months, which – coupled with increased competition and lower raw materials costs – has led to a number of price cuts as well. This was led by the Ford Mustang Mach-E, which received a new lithium-iron phosphate battery for standard range models and a big discount back in May.

The Ford F-150 Lightning followed suit after FoMoCo treated its EV pickup to significant price cuts just a couple of weeks ago. Production of the EV pickup just resumed at the Rouge Electric Vehicle Center this month following a six-week pause that stemmed from an expansion of the plant, which effectively tripled its production capacity, too.

We’ll have more on Model e soon, so be sure and subscribe to Ford Authority for 24/7 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. David Dickinson II

    Tesla spent 18 years selling their vehicles at a loss until they made a profit. Ford’s losses on EVs are running double this year what they were last year. EV prices are dropping and consumer interest is waning. Inflation is eating consumers alive, budgets (and credit cards) are maxed out. Interest rates keep going up. The EV road trip Farley put Ford on is going to be a rough one.

    Reply
  2. Tigger

    Or next year and the year(s) after that……

    Reply
  3. masb1955

    Great business model, Jimmy “Hardware Store” Farley.

    Reply
  4. Shockandawe

    How could they ever call that ugly Mach E a Mustang? I get it, they did it to sell them, but still……………..

    Reply

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