Ford loses €100,000 per electric vehicle sold

Ford loses €100,000 for each electric car sold

How long can a company sustain losing €100,000 on every unit it produces? For Ford, this has become daily reality. Its zero-emission division, Model E, accumulated $1.3 billion in losses in the first months of 2024, trinc a $4.7 billion deficit in 2023. The automaker admits it needs its suppliers' ingenuity to reduce manufacturing costs and stop bleeding money on every EV sold. Meanwhile, Tesla and BYD set the market pace while Western manufacturers watch from the sidelines with empty pockets.

The hole Ford cannot plug

Ford's electric division has become an accounting burden. The figure of $1.3 billion lost in early 2024 is not an isolated bad quarter: it continues a previous fiscal year that closed with $4.7 billion in the red. Company leadership has acknowledged needing external help to lower the production costs associated with its 100% electric vehicles. The message is clear: they cannot continue like this.

The problem is not just Ford's. Electrification caught traditional manufacturers with half-done homework. They invested billions in R&D, retooled production lines, and launched models that the market does not always welcome enthusiastically. The result is a cost structure that does not match the prices customers are willing to pay.

Why Western manufacturers fail to compete with Tesla and BYD

Tesla and BYD sell volume and control costs. Ford, Volkswagen, or Mercedes do not. The gap is not only technological: it is about scale, automation, and wage structures. In a Chinese factory, many automatable processes are already roboticized. In a US or European plant, there is still significant labor paid at Western wages producing at Western speeds. This differential translates into the final price.

Some argue the issue is strategic: Western brands raised prices on combustion cars to make EVs attractive, losing their traditional customer base without gaining new ones. Buyers seeking cheap cars go to Asian brands. Those looking for performance and added value do too. In the middle, Ford and others lack commercial arguments.

The tariff trap and supplier complaints

Brussels and Washington responded by raising tariffs on Chinese cars. The official logic is protecting European and American industry. The real logic, according to several analyses, is that if you cannot compete on cost, you erect a barrier. The problem is that tariffs do not fix inefficiency: they only increase product costs for consumers and keep alive an industry that has not solved its cost equation.

Ford's initial request for supplier ingenuity generated skepticism. If a steering wheel previously cost €100, the manufacturer now expects suppliers to produce it for €30. Such pressure only works if suppliers have margins to absorb it or accept working at a loss. Neither is sustainable long-term.

The hidden cost of electric cars

Beyond purchase price, electric vehicles carry costs buyers discover over time. Repairs are more expensive and require specialized staff. Public charging networks are insufficient, and some existing points are non-functional. Resale value drops faster than in combustion cars. Tax and parking benefits that justified purchases are disappearing in many cities.

Add regulatory uncertainty. There is talk of specific taxes on batteries for end-of-life treatment and shifting hydrocarbon taxes onto electricity. If this happens, the cost-per-kilometer advantage shrinks drastically. Buyers who calculated based on current prices may face a different scenario in a few years.

The car that no longer excites

The automotive sector thrives on renewal. For decades, buyers changed cars periodically because new models offered tangible improvements: more safety, better fuel efficiency, more comfort, superior performance. Airbags, ABS, stability control, climate control. Each generation brought visible upgrades.

Today, the sales pitch is a bigger screen and an electric motor. For part of the market, this does not justify the expense. A 2015 car still works, remains safe, and costs less than a new one. Fashion-driven planned obsolescence fails when wallets tighten and novelty does not convince.

The question Ford does not answer

Ford's CEO placed the reduction of EV production costs between 2030 and 2035. Meaning, the company assumes it will keep losing money for at least six more years. Reductions will come primarily from reduced labor. Translated: more robots, fewer workers.

Meanwhile, the strategy seems to be holding firm, pressuring suppliers, relying on tariffs, and waiting for the market to mature. It is a plan requiring deep pockets and patience. Ford has the former, but clarity on the latter is lacking.

Ultimately, the question is not whether electric cars are the future. It is who will pay the bill to get there. Apparently, Ford has decided its suppliers, workers, and shareholders will foot the check.