Ford Electric Vehicle Strategy
It appears as though Ford we know they’re losing around $100,000 on every electric car they sell, so they are essentially making less so they lose less money.
Even then, Ford say that they’ll lose around $5.5 billion this year on EVs, but they’ve come up with a new strategy.
New Strategy
Their new strategy is this force their suppliers to sell them cheaper products, then they can make EVs and lose less money. it’s an interesting situation because I’m going to guess that Ford supplies, probably not the main problem.
The main problem for Ford is the way that they make cars.
Ford are asking their suppliers to help with their quest towards profitability, which is sort of like, imagine you went for a little hike up a hill.
And really the real goal is climbing Mount Everest.
Scaling Back
There’s a pretty big difference, Ford say their survival depends on cost cutting.
Ford has spent billions attempting to compete with Tesla and other car companies, but they say they’re going to massively scale that back.
In fact, they’re postponing their new Ford F-150 lightning production of that vehicle, which would have been a much better vehicle, and it would have been able to compete better with vehicles like the Cybertruck and GM’s Silverado EV, which had much faster charging speeds.
Ford $1.3 Billion Hit in the First Quarter
But anyway, Ford have reported a $1.3 billion loss in the first quarter of this year.
They’re saying that there will be changes to the overall expenditure, which was previously 10 billion planned for the EV unit.
Jim Farley, who is the CEO, said it would be on the lower end of 8 billion to 9 billion during the company’s earnings call.
So Ford is saying that one of the ways that they’re going to lose less money is essentially, put the squeeze on their suppliers, make their suppliers, provide them with cheaper products.
Ford Attempt to Achieve Affordability
It’s in our best interests that we are able to deliver affordable EV products to our customers. To ensure affordability.
It is of paramount importance that our portfolio achieves further levels of material cost efficiency.
The only thing is, squeezing suppliers, what will that get them? Maybe like an additional 5% less in terms of, you know, the price for the product? I don’t imagine suppliers are making billions of dollars out of them.
I don’t think it’s going to make much of a difference, to be honest, liz Door, who is Ford’s chief supply chain officer, wrote these words and said everything is on the table.
Consider this a call to action guys for some context, for did lose around $120,000 on every vehicle that sold in the first quarter of this year, which is nothing in comparison to lucid, but it’s still a huge chunk of money.
And and for Ford are essentially saying rather than taking these seriously manufactured millions of them, that’s what Ford really need to do, you know, possibly do what Chinese car companies are doing now, which is use giga casting, use more LFP batteries, potentially make a lot more cars and Chinese supplies.
Ford Quest for Profitability in the EV Market
Chinese CEOs have made this comment, and Ford could be wise to pay attention to this. They say if you’re not manufacturing a minimum of 500,000 EVs a year, you cannot make a profit.
So the key to the biggest key to Ford reducing prices is making more. Even Tesla have said this themselves, you need to make a huge number of cars if you don’t.
Even with internal combustion, it’s just the same principle applies even with, you know, Japanese automakers like Mitsubishi, they have said the same thing.
You need to make a minimum number of vehicles. Otherwise, you cannot make a profit on a on a vehicle. It doesn’t matter what it is, whether it’s EV or not.
In my opinion, that’s the biggest problem for Ford, not the suppliers gouging them, charging them Bentley prices, which they’re obviously not.