Electric cars cannot continue to exist money loser forever but for now, that’s exactly what they are.
In a wide-ranging interview, Ford CEO Jim Farley addressed difficulty are facing the electric vehicle market. Initially touted as the next big thing in the auto industry, the new models have struggled to gain market share. beyond early adopters. As a result, sales have declined. That leaves automakers, like Ford, looking to invest in an emerging technology that will prove important for the future, regardless. Currently not profitable. “There’s no denying” that Ford’s electric vehicles will eventually have to become a money-making business, the CEO said.
“We will not invest in the future of electric vehicles unless we believe we will be profitable,” Farley declared. in an interview with Yahoo News.
So far, they don’t. But Farley is betting on a reversal. In the first quarter, Ford’s electric vehicle segment suffered a loss 1.3 billion USD. Farley said those losses will turn into profits in “a few years” as Ford rolls out its second generation of electric vehicles.
“In the first generation, we had a lot of opportunity to improve our losses,” Farley said. “But until we get to the second generation, which we start rolling out in the next few years, that’s when everything changes.”
A Ford spokesman said the company has not announced a specific date when it expects its electric vehicle business to become profitable. They added that new electric vehicles will only be released when that is the case. “We have also explained that we will introduce next-generation electric vehicles — they are in development, new from the start — when we are confident they will be available,” a Ford spokesperson said. profit in the first year. .
Ford and other electric vehicle manufacturers face a difficult task if they want to make good on Farley’s words. Recent months have shown how much the transition to electric vehicles has stalled. Consumer demand for all-electric vehicles has increased overshadow significantly. In turn, Ford has chosen to produce more hybrids instead of all-electric vehicles and pushed back on its latest electric vehicle offerings. More than anything else, ordinary car buyers—those who had no intention of buying an electric car—were put off by expensive. That doesn’t mean there was existing concerns about trouble involves finding a charger when the car’s battery is low.
Ford is currently the second best-selling electric vehicle manufacturer in the country, selling about 20,000 vehicles in the first quarter. The remaining hurdle for Ford and its peers is finding ways to reduce costs for their models, which still tend to be priced higher than standard internal combustion engine vehicles. It could take years for electric vehicles to reach cost parity with gasoline-powered vehicles. Electric cars are unlikely to be like that cheap production of front combustion engine cars by 2030, Farley speak last month.
The majority of lower priced electric vehicles come from Chinese manufacturers such as BYD. China leads the world in electric vehicles because it has an advantage in the production of car batteries, which cost significantly more than internal combustion engines. Farley estimates the cost of an internal combustion engine’s powertrain to be 10% of the cost of an electric vehicle. Until American companies like Ford can make car batteries and other parts more affordable, they won’t be able to compete.
“It’s really the batteries and the one-time investment to build battery factories and manufacturing facilities and build these very different types of vehicles,” Farley said.
The actual engineering of a vehicle, the parts needed to make an electric vehicle, are completely different from an internal combustion engine vehicle.”
Ford is currently building a new electric vehicle factory in Michigan. Construction on the facility has resumed after being halted during last summer’s autoworkers strike. Although, as construction continued into November, Ford shrink factory due to lower customer demand for electric vehicles. The downsizing will reduce the expected number of jobs at the plant from 2,500 to 1,700 and expected battery production to 230,000 a year, down from 400,000.
Earlier this year, Ford also cut electric vehicle production at its existing factories. Hit especially hard by lagging sales is the F150 Lighting, the electric version of the company’s popular pickup truck. In December, Ford announced that production cut of F150 Lightning in half. By March it was there fired two-thirds of employees at the Dearborn, Michigan facility where electric trucks are assembled.
The production cuts come at the same time as the Biden administration implemented a series of tariffs on Chinese electric vehicles aimed at protecting domestic manufacturers. Farley welcomed the short-term tariffs, but said Ford should not rely too much on them in the future.
“Tariffs have been a big part of leveling the sector for a while,” Farley said. “But ultimately Ford has to be fully competitive on cost and quality with anyone we compete with, including BYD or [other] Chinese players.”
Critics Tariffs also agreed with Farley that they would take effect immediately but Should not be a long-term solution. The main concern is that the US electric vehicle industry should learn to stand on its own feet. That way, vehicle manufacturing companies will be able to support both the U.S. economy and climate change efforts through energy conversion.
