Ford trims EV battery orders as losses swell to over $100k per electric car(electrek.co)
electrek.co
Ford trims EV battery orders as losses swell to over $100k per electric car
https://electrek.co/2024/05/13/ford-trims-battery-orders-losses-swell-over-100000-per-ev/
50 comments
"A small truck is what everyone wants. The old shit box pickups that could haul a sheet of plywood were amazing. Bring those back, make them cheep, dont pile on nonsense features. I'll buy one."
I agree. I am so tired of watching car commercials. I spend a lot of time watching NBA with my elderly mother. Cars and trucks splashing through the mud in the middle of no where, driving to fast on empty streets, and other dumb stuff (often with disclaimers about professional driver and closed courses). <hyperbole>Cars are just money sinks</hyperbole>.
I would like something reasonably priced, reasonably maintainable, and can get me and whatever I am carrying down the road. It would also be nice that I do not need to log into some server to drive (or fuel up) or to unlock some feature.
I agree. I am so tired of watching car commercials. I spend a lot of time watching NBA with my elderly mother. Cars and trucks splashing through the mud in the middle of no where, driving to fast on empty streets, and other dumb stuff (often with disclaimers about professional driver and closed courses). <hyperbole>Cars are just money sinks</hyperbole>.
I would like something reasonably priced, reasonably maintainable, and can get me and whatever I am carrying down the road. It would also be nice that I do not need to log into some server to drive (or fuel up) or to unlock some feature.
My family has a classic Toyota T100 pickup. Aside from a few bits of old plastic that have broken down, it's great: reliable, comfortable, small enough to drive and park in the city (most of the time), big enough to carry useful loads, strong enough to pull a trailer, zero digital bullshit. I think an electric version of this vehicle would be a real winner.
There is zero fucking chance Ford starts selling a $25k electric truck. I’d bet my last dollar.
amen brother. give us the kei trucks!
I'm truly at a loss (sorry) how any manufacturer would make a US$100K-per-unit loss on vehicles that are supposed to sell for $55K on average?
Sure, batteries are more expensive than gas tanks, but...
Sure, batteries are more expensive than gas tanks, but...
You're highlighting the absurdity of claiming the $100k loss per vehicle - except for Tesla, the auto industry is one of the few that amortizes all of their R&D for a new model into the COGS. So if Ford spends $1 billion on R&D and $1 billion on advertising for a new model they expect to sell for 10 years, they'll claim $200M/year in expense - so if they only sell 1 car with an actual materials cost of $25k - in their financials, that car will "cost" $200,025,000.
Yeah, that's indeed absurd, and something that if I were to try that, I'd probably go to jail for...
If you were vital to the economy, you could do it too!
What on earth do you think the crime is?
Improper amortization of R&D expenses? In most locales, including (from what I can gather) the US, there are (generous) initial tax subsidies, followed by a 5-to-15-years earn-back period.
Simply including R&D costs, imagined or otherwise, in COGS seems... fraudulent?
Simply including R&D costs, imagined or otherwise, in COGS seems... fraudulent?
Because among other reasons, CAFE standards force quotas via mandated averages, which leads to weird incentives and unexpected results (like EPA regs resulting in larger, not smaller, trucks).
If you're a company that needs to hit an mpg average, and fed rules allow absurd conversion on calculated equivalent empg, then your end up with the market we see today: Inexpensive to make SUVs and Trucks being turned into luxury products to justify absurd price increases, just to offset the losses from hitting ev/high-mpg quotas. (Which are relatively expensive to manufacture and sell for less).
This upside down market was predicted years ago, and has been moving in this direction for 20+ years. It was only a matter of time till profit-margin turned to loss-margin.
If it keeps going they'll approach prices practically giving EVs away in order keep selling their other vehicles that actually make a profit.
Tangent: from a sustainability engineering perspective, the lifetime energy costs/consumption of EVs is heavily front-loaded compared to iceVs. You pay more upfront (in both energy and $s) manufacturing the batteries and electric motors, whereas ice vehicles are cheaper to make but use/waste more energy in-use (per fillup).
A lot of (economic) market and regulatory forces are being pushed/pulled beyond limits to get to a desired result. That's why it doesn't make sense, prima facia.
If you're a company that needs to hit an mpg average, and fed rules allow absurd conversion on calculated equivalent empg, then your end up with the market we see today: Inexpensive to make SUVs and Trucks being turned into luxury products to justify absurd price increases, just to offset the losses from hitting ev/high-mpg quotas. (Which are relatively expensive to manufacture and sell for less).
This upside down market was predicted years ago, and has been moving in this direction for 20+ years. It was only a matter of time till profit-margin turned to loss-margin.
If it keeps going they'll approach prices practically giving EVs away in order keep selling their other vehicles that actually make a profit.
Tangent: from a sustainability engineering perspective, the lifetime energy costs/consumption of EVs is heavily front-loaded compared to iceVs. You pay more upfront (in both energy and $s) manufacturing the batteries and electric motors, whereas ice vehicles are cheaper to make but use/waste more energy in-use (per fillup).
A lot of (economic) market and regulatory forces are being pushed/pulled beyond limits to get to a desired result. That's why it doesn't make sense, prima facia.
New production line and tooling fixed costs are included in the per vehicle costs. Ford is missing their delivery estimates so the fixed costs get spread out across significantly less vehicles.
Probably includes R&D and plant setup. I am not an accountant, but under GAAP (most common set of accounting rules), I have heard that a lot of R&D is treated as an expense.
Cutting material orders and production plans because of slow sales may be wise, because you don't want logistics issues from overstock of supplies or finished units. But it's all about production and sales forecasting. But, it has essentially nothing to do with past R&D costs or how they are arbitrarily pinned onto units sold.
This assignment of R&D to COGS makes for this bizarre reporting and maybe even poor decision making, if people stop remembering why the accounting looks this way. The sunk R&D cost is already there, and adjusting the amortization denominator (number of units sold) on the fly makes for imaginary trends. This accounting fiction makes for a COGS that gets worse as you reduce sales. So any rhetoric around "losses per unit" is tainted with this counter-intuition.
Your losses are from each missed sale below your original marketing plan, where you predicted you would have enough sales to support the R&D expenditure. You don't recover them by reducing sales. At most, you can reduce further bleeding of operational costs like marketing and production if you truly believe that your sales targets are doomed.
This assignment of R&D to COGS makes for this bizarre reporting and maybe even poor decision making, if people stop remembering why the accounting looks this way. The sunk R&D cost is already there, and adjusting the amortization denominator (number of units sold) on the fly makes for imaginary trends. This accounting fiction makes for a COGS that gets worse as you reduce sales. So any rhetoric around "losses per unit" is tainted with this counter-intuition.
Your losses are from each missed sale below your original marketing plan, where you predicted you would have enough sales to support the R&D expenditure. You don't recover them by reducing sales. At most, you can reduce further bleeding of operational costs like marketing and production if you truly believe that your sales targets are doomed.
That probably includes one-off development and manufacturing costs
I would really like to buy a Mustang EV, but I don't want to pay the $20,000 above sticker the dealership is trying to charge at 7.99% interest. Not a mystery why these things aren't moving.
Genuinely curious as to why? Is it just the name/brand? Do you intend to own it for very long? IMO you stack the mach-e up to anything that is price or feature comparable (ICE or EV) and it's nothing but alarm bells. The common attributes among happy mach-e buyers in my experience is that they 1) hate tesla 2) just want to go fast 3) lease a new car every 3 years and most importantly 4) are susceptible to salesmen (See #3).
F150 Lightning EV is another story; it's a good platform although I have no idea why they made the acceleration curves so awful; It "drives like a truck" but I am not paying it a compliment there; the simulated engine/transmission lag is just the worst. You also basically still can't buy it so there's also that.
Ford has a very long way to go.
F150 Lightning EV is another story; it's a good platform although I have no idea why they made the acceleration curves so awful; It "drives like a truck" but I am not paying it a compliment there; the simulated engine/transmission lag is just the worst. You also basically still can't buy it so there's also that.
Ford has a very long way to go.
I tried to drive one. The huge screen seems to be a mistake. The car had none of the smart features of the Korean cars.
Why would anyone buy one while clearly better EVs exist? The car itself seems so boring when compared with for instance a Kia.
Why would anyone buy one while clearly better EVs exist? The car itself seems so boring when compared with for instance a Kia.
I don't understand this. Batteries may be better on the environment than gas, but they are impact-free. If you care about the environment, get the smallest car you can manage with. A larger battery means you are using more resources thus slowing down the number of electric cars that can get built. You are burning energy just dragging that larger batter around. Get a small car for city driving. Rent a gas car when you need the range.
If it's just a toy, then it's just better to not buy it at all. And if you don't care about the environment why care if it's electric?
I don't have the numbers on hand, but I'm certain a used Smart car is better for the planet than buying a new Tesla.
If it's just a toy, then it's just better to not buy it at all. And if you don't care about the environment why care if it's electric?
I don't have the numbers on hand, but I'm certain a used Smart car is better for the planet than buying a new Tesla.
You’ve made so many bad assumptions I don’t know where to start.
What if you need seats for 5? What if you care about the environment but also want to have fun? What if it’s about the acceleration of an EV that is enticing?
What if you need seats for 5? What if you care about the environment but also want to have fun? What if it’s about the acceleration of an EV that is enticing?
If we're going to follow that reductio ad absurdum, I live in a city why not just take the bus? But walking is only a few miles, why not just walk? Don't buy a house because it's an inefficient waste of space, resources, and energy. Live in a studio apartment under 300sq ft, enough for a bed and a desk. Buying food seems unnecessary when I can have planters and some chickens out back.
I like the Mustang, electricity where I live is already generated above 90% by renewables, despite transit my quality of life is improved with a vehicle. The environment is a nice side effect.
I like the Mustang, electricity where I live is already generated above 90% by renewables, despite transit my quality of life is improved with a vehicle. The environment is a nice side effect.
> The environment is a nice side effect.
So you don't really care about the environment, not really strongly at least, at least you are honest about it. I respect that.
> why not just take the bus?
I do take the bus, and have resisted getting a car, managing with Uber Green when necessary.
> why not just walk?
I do when I can, it's not practical for time and/or safety reasons, but it is ideal.
> Don't buy a house because it's an inefficient waste of space, resources, and energy.
This!!! God are single family dwellings the worst blight on the earth. They just shit suburban sprawl on the green earth. So much waste. Don't get my started on lawns. No reuse of infrastructure for heating or cooling. Just bad.
> Live in a studio apartment under 300sq ft, enough for a bed and a desk.
Actually this is just under 350 sq ft and just beautiful and luxurious: https://www.youtube.com/watch?v=WB2-2j9e4co
So you don't really care about the environment, not really strongly at least, at least you are honest about it. I respect that.
> why not just take the bus?
I do take the bus, and have resisted getting a car, managing with Uber Green when necessary.
> why not just walk?
I do when I can, it's not practical for time and/or safety reasons, but it is ideal.
> Don't buy a house because it's an inefficient waste of space, resources, and energy.
This!!! God are single family dwellings the worst blight on the earth. They just shit suburban sprawl on the green earth. So much waste. Don't get my started on lawns. No reuse of infrastructure for heating or cooling. Just bad.
> Live in a studio apartment under 300sq ft, enough for a bed and a desk.
Actually this is just under 350 sq ft and just beautiful and luxurious: https://www.youtube.com/watch?v=WB2-2j9e4co
> why not just take the bus? But walking is only a few miles, why not just walk? Don't buy a house because it's an inefficient waste of space, resources, and energy. Live in a studio apartment under 300sq ft, enough for a bed and a desk. Buying food seems unnecessary when I can have planters and some chickens out back.
That sounds like a wonderful life; I wish you the best of luck in pursuing it, and must admit I feel a bit jealous.
That sounds like a wonderful life; I wish you the best of luck in pursuing it, and must admit I feel a bit jealous.
Not to mention the dealerships don't want to sell these things, they fear the changes Ford wants to implement with structure to pricing and the whole dealership concept.
Like it or not the absence of PUBLIC research, of OPEN standard, impede an economy of scale that China have. Simply.
Like software must be FLOSS to keep evolving, cars must be built on common components with open standards where the design, software and hw are OPEN and mostly came out of public research. This allow for a reasonable progress and so to achieve an economy of scale.
Beside that: the Green New Deal can happen ONLY outside dense cities, again like it or not we can build single-family homes, sheds, small isolated buildings able to evolve, with enough space to evolve, able to be all-electric at consumption level compatible with our generation capacity, not towers, mid/high rise buildings in dense cities. Again this is a mega-plan that could be done in terms of raw materials thanks to remote work that allow enough people to leave the city to create enough mass outside to attract other non-remote workers, NOT the USA suburb style but the EU low density area style where people live and work intermixed without the need to make large trips for anything. Cities CAN'T evolve: a small example, most buildings have mailboxes typically all layered in a wall, very effective to get paper mails. Absolutely not effective for parcels. Well, back than parcels was rare and paper mail a common things with few per days for many families. Adapting to the online retail in dense cities is a nightmare, there is no room to leave parcels in condos. Such a simple change, such a problem. This is the city, efficient for the state of thing it's designed, able to change a little bit, but for more we need to rebuilt from scratch and costs are FAR HIGHER than being spread. The new "right density" for the economy of scale is living spread. The sole way to achieve this is a public plan. Otherwise after two "western civil wars" (world wars) on the verge of a third one we have committed suicide enough to being finally dead. Oh, yes, China have a devastating demographic problem, so it can't win in the long term but that's does not change our foreseeable future.
Like software must be FLOSS to keep evolving, cars must be built on common components with open standards where the design, software and hw are OPEN and mostly came out of public research. This allow for a reasonable progress and so to achieve an economy of scale.
Beside that: the Green New Deal can happen ONLY outside dense cities, again like it or not we can build single-family homes, sheds, small isolated buildings able to evolve, with enough space to evolve, able to be all-electric at consumption level compatible with our generation capacity, not towers, mid/high rise buildings in dense cities. Again this is a mega-plan that could be done in terms of raw materials thanks to remote work that allow enough people to leave the city to create enough mass outside to attract other non-remote workers, NOT the USA suburb style but the EU low density area style where people live and work intermixed without the need to make large trips for anything. Cities CAN'T evolve: a small example, most buildings have mailboxes typically all layered in a wall, very effective to get paper mails. Absolutely not effective for parcels. Well, back than parcels was rare and paper mail a common things with few per days for many families. Adapting to the online retail in dense cities is a nightmare, there is no room to leave parcels in condos. Such a simple change, such a problem. This is the city, efficient for the state of thing it's designed, able to change a little bit, but for more we need to rebuilt from scratch and costs are FAR HIGHER than being spread. The new "right density" for the economy of scale is living spread. The sole way to achieve this is a public plan. Otherwise after two "western civil wars" (world wars) on the verge of a third one we have committed suicide enough to being finally dead. Oh, yes, China have a devastating demographic problem, so it can't win in the long term but that's does not change our foreseeable future.
The US and the EU did shot their traditional car manufacturers in the head with the push towards EVs (which is mandatory, by law, in the entire EU: manufacturers aren't supposed to sell any ICE car anymore in... 2035: that's way too soon).
Green is all fine and well but at the cost of killing BMW, Mercedes, VW, Audi, Ford, etc. and handing their customers to... Chinese manufacturers?
Is it worth it? Is the push to EV, as it's done today, worth destroying national companies at the benefits of new chinese brands?
Green is all fine and well but at the cost of killing BMW, Mercedes, VW, Audi, Ford, etc. and handing their customers to... Chinese manufacturers?
Is it worth it? Is the push to EV, as it's done today, worth destroying national companies at the benefits of new chinese brands?
At least the American brands have been useless and uncompetitive for decades. They were fading before the Great Recession as Japanese manufacturers were pushing them out of many segments, then got a second lease on life with all the gov money and have again found themselves flailing.
Volkswagen and Mercedes chose fraud over innovation when it came to environmental regulations.
They aren't great companies suddenly facing a brand new opponent. They have been consistently dysfunctional.
At a certain point, the companies need to prove they care about surviving long term.
Volkswagen and Mercedes chose fraud over innovation when it came to environmental regulations.
They aren't great companies suddenly facing a brand new opponent. They have been consistently dysfunctional.
At a certain point, the companies need to prove they care about surviving long term.
It's even better!
When the US automakers were told they would have to meet mileage targets that Japanese automakers had been meeting for over 10 years... they sued the EPA to say it's unfair!
So they openly admitted they couldn't compete with 10 year old foreign vehicles.
And they still got bailed out!
When the US automakers were told they would have to meet mileage targets that Japanese automakers had been meeting for over 10 years... they sued the EPA to say it's unfair!
So they openly admitted they couldn't compete with 10 year old foreign vehicles.
And they still got bailed out!
Given that the US and California have pumped tens of billions in taxpayer dollars into electrifying our auto fleet, more than China has given its EV makers, it is a shame that China out built the US on this modern infrastructure. GM and Ford are shit companies. There can be no other explanation for their failure despite the US's massive subsidies. Tesla is barely a player and they've got about $8 billion in government handouts while China's BYD is killing it on only about $3.5 billion in CCCP cash.
> Ford is shifting to smaller, more profitable EVs with plans to delay its three-row electric SUV in the US.
I do wonder how big my demographic of "huge car haters" is. Bring back smaller and more profitable, already!
I do wonder how big my demographic of "huge car haters" is. Bring back smaller and more profitable, already!
"Tesla killer"
And this is before Biden’s import tariffs!
You're assuming that the batteries come from China, obviously, and that, say, RFKs tariffs would be, like, zero?
Because if you're counting on Trump to save you, I've got some possibly sobering news: https://www.reuters.com/world/us/trump-says-us-china-tariffs...
Because if you're counting on Trump to save you, I've got some possibly sobering news: https://www.reuters.com/world/us/trump-says-us-china-tariffs...
Nope, tariffs are a bad idea no matter which side does it. Biden campaigned on getting rid of Trump’s tariffs, but is only doubling down after 4 years. I think it’s fair to put it on him now.
Tariffs rebalance the free trade playing field when a small company is competing with free financing from a nation state. Everyone does it.
Like Tesla's $8 billion subsidies vs BYD's $3.5 billion in subsidies imbalance?
Add a zero to BYD due to currency fixing by the CCP and you might be closer :)
I'm curious how many imports that tariff will even impact, it has to be very low currently, right?
https://cleantechnica.com/2024/04/11/unsold-chinese-evs-are-...
https://www.scmp.com/business/article/3253116/chinas-lithium...
China gave out huge incentives in the last decade to move to EV's. There are something like 100 different EV makers in china. No that number is not an exaggeration.
The idea that in the current economic storm EV dumping is going to happen is a real thing. The Biden move is proactive and the EU is going much slower but on the same path.
https://www.scmp.com/business/article/3253116/chinas-lithium...
China gave out huge incentives in the last decade to move to EV's. There are something like 100 different EV makers in china. No that number is not an exaggeration.
The idea that in the current economic storm EV dumping is going to happen is a real thing. The Biden move is proactive and the EU is going much slower but on the same path.
Only a few of those have the capacity to export and those have got less subsidies than US EV makers. Tesla ~$8B vs BTD ~3.5B for example.
You missed a step:
The average programmer in china makes less than half what their US counterpart makes. Cost of living far less than half of the us, pay for factory workers is far far less than the dollars to yuan conversion.
It's far morespending power than just 3.5 vs 8
The average programmer in china makes less than half what their US counterpart makes. Cost of living far less than half of the us, pay for factory workers is far far less than the dollars to yuan conversion.
It's far morespending power than just 3.5 vs 8
> Biden campaigned on getting rid of Trump’s tariffs
Yeah, well, maybe?
"Democratic presidential candidate Joe Biden said he would remove Donald Trump’s tariffs on imports from China, which are taxes on U.S. consumers and companies. An aide later asserted the former vice president would reevaluate the tariffs upon taking office."
Yeah, well, maybe?
"Democratic presidential candidate Joe Biden said he would remove Donald Trump’s tariffs on imports from China, which are taxes on U.S. consumers and companies. An aide later asserted the former vice president would reevaluate the tariffs upon taking office."
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> In the meantime, Ford is following Toyota and other legacy automakers with plans to introduce more hybrids as a bridge to its next-gen EVs.
This is the obvious solution. EVs are so far from being ready for primetime
This is the obvious solution. EVs are so far from being ready for primetime
A small truck is what everyone wants. The old shit box pickups that could haul a sheet of plywood were amazing. Bring those back, make them cheep, dont pile on nonsense features. I'll buy one.