(CNN) — Ford’s electric vehicle unit reported that losses soared in the first quarter to $1.3 billion, or $132,000 for each of the 10,000 vehicles it sold in the first three months of the year, helping to reduce profits. profits of the company in general.
Ford, like most automakers, announced plans to shift from traditional gasoline-powered vehicles to electric vehicles in the coming years. But it is the only traditional automaker to break out the results of its electric vehicle retail sales. And the results it reported Wednesday show another sign of profit pressures in the electric vehicle business of Ford and other automakers.
The electric vehicle unit, which Ford calls Model e, sold 10,000 vehicles in the quarter, 20% less than the amount it sold a year earlier. And its revenue plummeted 84% to about $100 million, which Ford attributed primarily to industry-wide price cuts for electric vehicles. This resulted in a loss of US$1.3 billion before interest and taxes (EBIT) and the huge per-vehicle loss in the Model e unit.
A price war between electric vehicles for about a year and a half made profitability very difficult, said Ford Chief Financial Officer John Lawler. He said that while Ford shaved about $5,000 off the cost of each Mustang Mach-E, “revenue is falling faster than we can shave the cost off.”
In 2023, Ford Model E reported a full-year EBIT loss of $4.7 billion on sales of 116,000 electric vehicles, or an average of $40,525 per vehicle, just over a third of the first-quarter loss.
The Model e does not handle all of the company’s electric vehicle sales. Some are also sold through its Ford Pro unit, which handles fleet sales to corporate and government buyers. And Ford said it had strong demands for electric vehicle sales at that unit, including an order for 9,250 E-Transit vans from the U.S. Postal Service, to be delivered through the end of this year, and an order for more than 1,000 of its F-150 Lightning pickup trucks and Mustang Mach-E SUVs from Ecolab, a global sustainability company.
Despite the electric vehicle losses, Ford CEO Jim Farley said in a call with investors that the company is making changes to its electric vehicle business and that the company’s planned next generation of electric vehicles will allow it be profitable in that business in the near future.
Ford Pro, which primarily sells traditional internal combustion vehicles, was the main profit driver for Ford in the quarter, posting EBIT of $3 billion, or more than double what it earned a year ago, while revenue from unit increased 36% to $18 billion. The number of vehicles sold by Ford Pro increased 21% to 409,000.
But Ford Blue, which handles sales of gasoline cars to consumers, reported that sales fell 11% to 626,000, and revenue fell 13% to $21 billion. This resulted in EBIT on those traditional sales falling by almost two-thirds to $905 million.
Together, Ford Blue and Ford Pro produced about the same level of profits as the previous year, but rising losses at the Model E unit meant Ford’s overall net income fell 20% to $1.3 billion. , while its adjusted earnings per share fell to 49 cents, down 21% from a year ago but slightly better than analysts’ forecasts of 44 cents per share.
Ford rival General Motors reported earlier this week that it remains on track for its North American electric vehicle business to become profitable in the second half of this year, while Stellantis, which makes cars and trucks in North America under the name Jeep, Ram, Dodge and Chrysler, said their European electric vehicle business was already profitable last year.
This Tuesday, Tesla, the world’s largest electric vehicle maker, reported that its adjusted profits plunged 48% in the first quarter while revenue fell 9%, after reporting the first year-over-year drop in sales since the pandemic. .
