Revenue from Fords EV division implodes

Ford Motor Company reported in its first-quarter results a whopping 84% plunge in revenue from its all-electric Model e division. While the commercial department is demonstrating positive growth, and the Detroit giant exceeded overall expectations, it is grappling with substantial challenges in its electric vehicle (EV) sector.

Overall, the news isn’t bad. Recording $42.8 billion (€39,9 billion), Ford managed to establish a 3% increase in revenue from the previous year, surpassing analyst forecasts, which agreed upon a little more than $40.10 billion (€37,4 billion).

However, net income dropped to $1.3 billion (€1,2 billion) from $1.8 billion (€1.6 billion) in 2023, while adjusted earnings before interest and taxes (EBIT) fell 18% to $2.8 billion (€2,6 billion). Lower vehicle prices and the timing of the launch of the new F-150 are to blame. The latter is the best-selling car in the US.

Sales rise, profits plunge

The coin for its future-prone electric department Model e shows two distinct sides. In fact, unit sales of EVs surged, with the division selling 20,233 vehicles – an 86% increase. However, the segment’s revenue suffered from aggressive pricing strategies to counteract intense market competition, resulting in a substantial $1.3 billion (€1,2 billion) loss for the quarter. Ford’s best-selling EV is the Mustang Mach-E, followed by the F-150 Lightning, and the E-Transit. The first two were heavily discounted.

“Ford is currently reevaluating its approach to the electric vehicle market,” stated Marianne Lake, Ford’s Chief Financial Officer. “We are scaling our production to meet strategic targets and consumer demands, notably focusing on smaller, more affordable EV models.” All carmakers have realized that the early adopter phase and the company car market for EVs are reaching their limits. The broader public won’t step in if smaller and cheaper models lag.

One example of this revised approach is reducing the F-150 Lightning production to a single shift from last year’s three shifts in anticipation of fluctuating market demands. The race to zero-emission pickups hasn’t been successful for any brand, with Lordstown going bankrupt, Rivian riding a cobbly road, and Tesla facing expensive recalls and bad publicity over the Cybertruck.

Ford Blue and Ford Pro

Ford’s traditional internal combustion engine segment, Ford Blue, isn’t compensating either. It also experienced a revenue decline, although a less substantial 13%, primarily influenced by the aforementioned model shift toward the new F-150.

And then there’s Ford Pro, the automaker’s commercial and software business, which emerged as a key growth driver. This division saw a 21% increase in volume and a 36% rise in revenue, contributing significantly to an EBIT margin of nearly 17% and quarterly revenue of $18 billion (€16,8 billion).

Ford expects continued financial pressure on its EV division for the upcoming quarters, projecting a loss between $5.0 (€4.6) to $5.5 billion (€5,1 billion) for the year. This forecast considers the financial impact of an expensive collective bargaining agreement with the UAW union, which has forced reductions in both investment and operational expenses.