Ford Expecting to Lose $4.5 Billion on Electric Vehicles This Year
Despite an overall increase in profits, Ford Motor Company is expecting to lose $4.5 billion on its electric vehicle (EV) initiatives this year.
Ford’s EV division, “Ford Model E” lost $2.1 billion last year, and is on track to double that amount this year, having already lost $1.8 billion to date, according to the company’s second-quarter financial results.
Ford’s CEO Jim Farley said in a press release that the adoption of EV vehicles has been “a little slower than expected,” but explained that this would ultimately “benefit early movers like Ford.”
“EV customers are brand loyal and we’re winning lots of them with our high-volume, first-generation products,” Farley continued. “We’re making smart investments in capabilities and capacity around the world; and, while others are trying to catch up, we have clean-sheet, next-generation products in advanced development that will blow people away.”
Despite citing financial losses on EVs, the company recently announced price reductions for its electric F-150 Lightning pickup trucks because the company has been able to source cheaper battery materials from China. To lower costs, Ford is now using iron for the electric vehicle batteries instead of nickel and cobalt.
China is also one of the primary suppliers of lithium, a necessary component of electric vehicle batteries, and is responsible for mining approximately 7,500 tonnes a year. While EVs are largely advertised as an environmentally conscious mode of transportation, the manufacturing process not only disturbs natural habitats but leads to water loss and ground destabilization. Additionally, hundreds of human rights violation concerns have been raised surrounding the mining process for these raw materials used to create EVs.
Nevertheless, several states have moved to forcibly prop up the EV market, by banning the sale of gas-powered vehicles by 2035. California, New York, Vermont, and Massachusetts have already adopted plans to implement new gasoline-powered vehicle bans.
The expected $4.5 billion in losses is still negligible compared to Ford’s second-quarter revenue of $45 billion and net income of $1.9 billion, and will likely pay off in the long term, as predicted by Farley, as government officials continue to push the product on their constituents.
