Ford succeeded in selling 20,962 EVs in the third quarter, narrowly outperforming General Motors, primarily because of an uptick in Mustang Mach-E production. Mach-E sales climbed 42.5 percent in Q3, with 14,824 units moving off the lot—5,872 of these in September alone.
Revenue for Ford's EV division, the Ford Model e unit, saw a year-over-year increase of 26 percent, reaching $1.8 billion, driven by a 44 percent surge in EV deliveries.
However, the positive news stops there for Ford's electric vehicle sector. Even with higher sales figures, the division's losses expanded in Q3, recording an operating loss of $1.3 billion, an increase from $1.1 billion in the prior quarter and more than twice its Q3 2022 loss.
Ford incurred a loss of approximately $36,000 per EV sold this quarter, exceeding its projected Q2 loss of $32,350 per EV. For the entire fiscal year, Ford anticipates a total loss of $4.5 billion for its EV segment. The company attributes this Q3 shortfall to "ongoing investments in next-gen EVs and difficult market conditions." Ford also pointed out that many consumers in North America are hesitant to pay more for electric vehicles compared to gas or hybrid options, impacting both price points and profit margins.
As a result, Ford announced it will reduce around $12 billion in future EV investments and trim some Mustang Mach-E production. The automaker is also postponing the opening of one of its two planned battery factories in Kentucky, in collaboration with SK On. The timeframe for these delays wasn't specified, but the second battery plant in Kentucky and the Blue Oval City facility in Tennessee are still proceeding as planned.
John Lawler, Ford's Chief Financial Officer, commented during the earnings call, as reported by Automotive News, “The narrative has taken over that EVs aren't growing; they're growing. It's just growing at a slower pace than the industry and, quite frankly, we expected." Lawler also indicated that reduced near-term demand means Ford will need less EV production capacity.
It's worth noting that Ford isn't scrapping plans for its next generation of electric vehicles, which includes a three-row utility vehicle and a full-size pickup.
Additionally, the automaker is bracing for an increase in labor costs, following a tentative deal with the United Auto Workers (UAW) union. The agreement proposes a 25 percent wage hike for 57,000 employees over a five-year period. According to CFO John Lawler, this could add between $850 and $900 to the labor cost per vehicle.
Ford also disclosed that the UAW's 41-day strike led to a production loss of 80,000 vehicles, costing the company $1.3 billion and essentially erasing $1.2 billion in third-quarter earnings.
Sources: Ford, Reuters, Automotive News