Ford's Electric Vehicle Business Losses and Cost Reduction Efforts
TapTechNews on May 17th reported that in the first quarter of this year, although pure electric products such as the Mustang Mach-E and F-150 Lightning showed strong growth, Ford's electric vehicle business still suffered losses of billions of US dollars. According to Ford's profit forecast, the loss is expected to increase to approximately 5.5 billion US dollars by the end of this year.
The foreign media Crain's Detroit Business published Ford's internal memo on Thursday. Liz Door, Ford's chief supply chain officer, has issued a call to action to suppliers, suggesting that they propose measures to reduce production costs.
TapTechNews attached part of the memo as follows:
We have all invested heavily in the electric vehicle business success, and we will share the joys and sorrows. In order to achieve affordability, our electric vehicle product portfolio must further improve the material cost efficiency.
...We need your best ideas for cost reduction, even if these ideas have been rejected by Ford before. We are also willing to consider those ideas that may require investment but contribute to profitability.
Ford requires suppliers to develop 'incremental cost reduction proposals' for the current and upcoming series of electric vehicles, including the F-150 Lightning pickup, the next-generation P800 electric pickup, Mustang Mach-E, E-Transit van, and large electric SUV and other models.
Ford suggests that suppliers reduce costs in aspects such as 'business, design, content, footprint and value chain', and also includes rapidly adjusting production capacity downward when necessary and reusing capital as needed.
According to TapTechNews' previous report, although Ford's electric vehicle sales increased by 96.6% year-on-year in April, Ford currently loses about 130,000 US dollars (currently about 941,000 yuan) for every electric vehicle sold in its 'Modele' project.
The reason for the huge loss is that Ford needs to spend billions of US dollars every year to develop electric vehicles, but the company's electric vehicle sales are not good. Last year, the company lost 58,000 US dollars for every electric vehicle sold, and this year's loss has doubled from before. Ford said that the industry-wide price reduction is the main reason for these disappointing results.