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As far as I can tell Ford is still losing money on every EV sold (while Tesla is making 20% margin). Not sure how much they can grow if they can’t flip to profi

As far as I can tell Ford is still losing money on every EV sold (while Tesla is making 20% margin). Not sure how much they can grow if they can’t flip to profitable.

jjoonathan 3y ago
Are they still losing money if you take out fixed costs? Or are they "losing money on every EV" in the sense that the first car off a $5B production line is a $5B loss (modulo depreciation schedule)?
- simondotau 3y ago
  Yes. They're losing money as in negative profit margin per unit. The more units they sell, the more money they lose.
  - Tagbert 3y ago
    Are you basing that on their recent financial report where they showed a $3B loss? That was not an operational cost (cost of sales). It was a capitol cost (infrastructure to build and equip factories). That is not what would normally be thought of as a loss per unit.
    - 93po 3y ago
      Sources online don't say definitively, so it's hard to really know. Ford says a large portion of the loss per unit is engineering costs. They also say the expect positive margins in 2026. I imagine if it wasn't a loss beyond R&D expense they'd proudly proclaim as much, and they aren't.
neogodless 3y ago
Ford's ICE division is still quite profitable, so that supports them in the meantime. Why do you assume they "can't flip to profitable" on their (quite young) EV division?
- brianwawok 3y ago
  What are their reasons for not being profitable? Is it volume (they need to double volume), or is it the vast inefficiencies in their network (3rd party supplier glut, dealerships, etc). I am not sure a manufacturer with a dealer network and union assembly could ever match price with a no-dealer no-union manufacturer.
  - itsoktocry 3y ago
    >I am not sure a manufacturer with a dealer network and union assembly could ever match price with a no-dealer no-union manufacturer. Are you saying that Tesla can only make money by having a relatively underpaid workforce? Do you think that's sustainable? >vast inefficiencies in their network (3rd party supplier glut, dealerships, etc) Wait, you think the automotive supply chain is inefficient? JIT auto manufacturing is a modern marvel... Dealers? That's a tough one. Lots to improve, but you can't eliminate customer service. I'm not sure being beholder to the manufacturer is great for consumers, either.
    - cogman10 3y ago
      > Wait, you think the automotive supply chain is inefficient? JIT auto manufacturing is a modern marvel... It's super efficient for a the current high complexity vehicles we have. It really struggles, though, when you deviate from the formula. This is pretty evident with the earlier ford evs like the ford focus. Where the only way they could get a battery in is by slapping it into the trunk. The skateboard model of evs is WAY more efficient but requires significant retooling. And, at this point, is pretty much all inhouse standards. There's nobody (AFAIK) manufacturing a standard battery pack module. Every EV manufacture has been left to making their own standards there. That's what has driven up the cost more than anything. Huge portions of the manufacturing line need to retool and that's a long slow processing. In the meantime, companies like telsa were able disrupt by doing the less efficient ground up approach. As EVs become more common and standardized, this will of course change and tesla's ev manufacturing will end up a liability rather than an asset. But until that happens, they get some pretty nice profit margins that will be hard to beat.
itsoktocry 3y ago
>while Tesla is making 20% margin They have 20% gross profit margins, while capitalizing costs that other companies expense. You can't compare the numbers.
- brianwawok 3y ago
  I am not sure this matters. The point is Tesla is making money per EV sold, and Ford is losing money per EV sold. I don't care if the Tesla number is 20% or 14% or 31%... what matters is the more Ford makes, the more they lose - and I don't yet see how they are going to flip that.
  - alphabettsy 3y ago
    How you do your accounting absolutely matters. See Enron.
    - brianwawok 3y ago
      I’m arguing on the internet not filing taxes.

As far as I can tell Ford is still losing money on every EV sold (while Tesla is making 20% margin). Not sure how much they can grow if they can’t flip to profitable.

jjoonathan 3y ago

Are they still losing money if you take out fixed costs? Or are they "losing money on every EV" in the sense that the first car off a $5B production line is a $5B loss (modulo depreciation schedule)?

simondotau 3y ago
Yes. They're losing money as in negative profit margin per unit. The more units they sell, the more money they lose.
- Tagbert 3y ago
  Are you basing that on their recent financial report where they showed a $3B loss? That was not an operational cost (cost of sales). It was a capitol cost (infrastructure to build and equip factories). That is not what would normally be thought of as a loss per unit.
  - 93po 3y ago
    Sources online don't say definitively, so it's hard to really know. Ford says a large portion of the loss per unit is engineering costs. They also say the expect positive margins in 2026. I imagine if it wasn't a loss beyond R&D expense they'd proudly proclaim as much, and they aren't.

neogodless 3y ago

Ford's ICE division is still quite profitable, so that supports them in the meantime. Why do you assume they "can't flip to profitable" on their (quite young) EV division?

brianwawok 3y ago
What are their reasons for not being profitable? Is it volume (they need to double volume), or is it the vast inefficiencies in their network (3rd party supplier glut, dealerships, etc). I am not sure a manufacturer with a dealer network and union assembly could ever match price with a no-dealer no-union manufacturer.
- itsoktocry 3y ago
  >I am not sure a manufacturer with a dealer network and union assembly could ever match price with a no-dealer no-union manufacturer. Are you saying that Tesla can only make money by having a relatively underpaid workforce? Do you think that's sustainable? >vast inefficiencies in their network (3rd party supplier glut, dealerships, etc) Wait, you think the automotive supply chain is inefficient? JIT auto manufacturing is a modern marvel... Dealers? That's a tough one. Lots to improve, but you can't eliminate customer service. I'm not sure being beholder to the manufacturer is great for consumers, either.
  - cogman10 3y ago
    > Wait, you think the automotive supply chain is inefficient? JIT auto manufacturing is a modern marvel... It's super efficient for a the current high complexity vehicles we have. It really struggles, though, when you deviate from the formula. This is pretty evident with the earlier ford evs like the ford focus. Where the only way they could get a battery in is by slapping it into the trunk. The skateboard model of evs is WAY more efficient but requires significant retooling. And, at this point, is pretty much all inhouse standards. There's nobody (AFAIK) manufacturing a standard battery pack module. Every EV manufacture has been left to making their own standards there. That's what has driven up the cost more than anything. Huge portions of the manufacturing line need to retool and that's a long slow processing. In the meantime, companies like telsa were able disrupt by doing the less efficient ground up approach. As EVs become more common and standardized, this will of course change and tesla's ev manufacturing will end up a liability rather than an asset. But until that happens, they get some pretty nice profit margins that will be hard to beat.

itsoktocry 3y ago

>while Tesla is making 20% margin They have 20% gross profit margins, while capitalizing costs that other companies expense. You can't compare the numbers.

brianwawok 3y ago
I am not sure this matters. The point is Tesla is making money per EV sold, and Ford is losing money per EV sold. I don't care if the Tesla number is 20% or 14% or 31%... what matters is the more Ford makes, the more they lose - and I don't yet see how they are going to flip that.
- alphabettsy 3y ago
  How you do your accounting absolutely matters. See Enron.
  - brianwawok 3y ago
    I’m arguing on the internet not filing taxes.