Ford model e deepens losses over Q2
With sales of just 26,000 units (-26 per cent), Ford Model e is by far the Group’s smallest division. Ford Blue for combustion and hybrid cars sold 741,000 vehicles (+3%) in Q2, while the van division Ford Pro sold 375,000 vehicles (+3%). While Ford Blue and Ford Pro were able to increase their turnover even more than sales in percentage terms, Ford Model e also saw a significant decline here – by -37 per cent to 1.1 billion dollars. The EBIT of the electric car division is also negative at around 1.1 billion dollars. Ford Pro, on the other hand, generated a positive EBIT of 2.56 billion dollars.
The figures for Ford Model e are also not good when looking at the first half of the year. With 36,000 vehicles (-22%), the division generated sales of 1.3 billion dollars (-50%), while Ford Model e’s loss widened from 661 million dollars in the first half of 2023 to a whopping 2.46 billion dollars. The EBIT margin is therefore -195 per cent. In the first quarter, the EBIT loss was even slightly higher at 1.3 billion dollars.
The company attributes Ford Model e’s renewed, billion-dollar EBIT loss in the second quarter to the ‘continued industry-wide price pressure on first-generation electric vehicles and lower wholesale prices’. The company was able to reduce costs at Ford Model e by 400 million dollars. However, the price pressure ‘more than offset’ this.
Incidentally, Ford no longer dares to provide an outlook for the electric car division: the averages only include EBIT forecasts for Ford Blue (9.0 to 10.0 billion dollars) and Ford Pro (6.0 to 6.5 billion dollars). As the Group EBIT is estimated at ten to twelve billion dollars and the Ford Credit finance division was at least profitable in Q2, it can be assumed that Ford expects Model e to make further losses in the billions.
This business situation has already had a concrete impact on some business decisions: This week, Ford cancelled its 2021 target of selling only electric cars in Europe from 2030. A few days earlier, it was announced that the planned electric car production at the Canadian plant in Oakville will not be realised – instead, the profitable super-duty trucks with combustion engines will be built there in future.
Ford Pro customers are also generating more revenue from digital services, with software subscriptions increasing by 35 per cent in the quarter, according to Ford. “The capabilities we’re developing in electric vehicles and software-enabled and physical services are wide competitive moats between Ford Pro and other companies,” said Ford CEO Jim Farley. “Over time, we’ll build out those same kinds of benefits for Ford Blue and Ford Model e customers and further distinguish us from other automakers, traditional and new ones.”
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