> The losses go far beyond the cost of building and selling those 10,000 cars, according to Ford. Instead the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off.
That's missing the forest for the trees. They're losing money on every vehicle they sell. There needs to be a lot more R&D to get the vehicles to a price point that consumers will purchase them and they can actually make a profit. Thus far, their R&D has been a net loss for the company.
I'm sure at least a good portion of it will pay off eventually, but there's no guarantee of how much, or how long it will take.
R&D are costs which a company needs to pay to get a vehicle on the road. Whether the car, as a whole, is making a loss or not depends on whether it can pay for the R&D costs over it's lifetime.
Car production is very capital intensive, besides R&D you have the retooling of entire production lines as another major cost factor.
The real question is whether the sales of these cars will eventually pay for the capital expended. At current EV sales number that is not going to happen, but manufacturers like Ford obviously speculate on large future growth in demand for EVs.
At least in the EU expected EV growth was much larger than actual EV growth.
Hard to say. Profit per sale doesn't tell the whole story. Mach E and F150 Lightning help Ford offset the CAFE contribution of their high margin gas guzzling cars and trucks. How much would they be making on Mustangs if they had to pay CAFE penalties?
I'd be interested to know the profit/CAFE for each Ford model and how much they are spending on R&D for EV vs ICE.
Lots of new technology ventures lose money at first; that's necessary. That includes other electric car manufacturers.
You sell what you can and at least offset costs somewhat, and also build marketshare, build infrastructure (dealerships, etc.), and learn invaluable lessons about everything from sales to service to reliability to performance, etc.
Or wait until you have the perfect machine that makes you profitable, then begin sales. That doesn't make any sense.
thebruce87m|1 year ago
> The losses go far beyond the cost of building and selling those 10,000 cars, according to Ford. Instead the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off.
So the “loss” includes R&D.
zdragnar|1 year ago
I'm sure at least a good portion of it will pay off eventually, but there's no guarantee of how much, or how long it will take.
constantcrying|1 year ago
R&D are costs which a company needs to pay to get a vehicle on the road. Whether the car, as a whole, is making a loss or not depends on whether it can pay for the R&D costs over it's lifetime.
Car production is very capital intensive, besides R&D you have the retooling of entire production lines as another major cost factor.
The real question is whether the sales of these cars will eventually pay for the capital expended. At current EV sales number that is not going to happen, but manufacturers like Ford obviously speculate on large future growth in demand for EVs.
At least in the EU expected EV growth was much larger than actual EV growth.
passwordoops|1 year ago
linotype|1 year ago
mulmen|1 year ago
I'd be interested to know the profit/CAFE for each Ford model and how much they are spending on R&D for EV vs ICE.
mmooss|1 year ago
You sell what you can and at least offset costs somewhat, and also build marketshare, build infrastructure (dealerships, etc.), and learn invaluable lessons about everything from sales to service to reliability to performance, etc.
Or wait until you have the perfect machine that makes you profitable, then begin sales. That doesn't make any sense.