Ford’s Model e EV Division Faces Revenue Challenges in Q1 2024

Image: Ford

The automotive industry is undergoing a seismic shift, with electric vehicles (EVs) at the forefront of this transformation. However, Ford’s Model e EV division faced significant revenue losses in the first quarter of 2024, raising questions about the company’s strategy and financial viability.

The Numbers: A Tale of Contrasts

1. Net Revenue: Ford’s Model e EV division reported a net revenue of approximately $100,000 in Q1 2024. However, when expenses are factored in, the division suffered a staggering loss of $1.3 billion for the quarter¹.

2. Comparison to Q1 2023: The massive drop in revenue compared to the same period in 2023 can be attributed to margin-cutting price reductions. Ford’s aggressive pricing strategy impacted the bottom line, resulting in an 84% decline in revenue¹.

3. Ford Pro vs. Model e: While Ford’s Ford Pro fleet division thrived, generating over $3 billion in revenue—more than three times that of the internal-combustion-engine-focused Ford Blue arm—the Model e division remained a financial drain¹. Ford Pro made approximately $7,300 per vehicle sold, while Ford Blue pocketed around $1,400 per vehicle. In stark contrast, Model e lost close to $130,000 per EV sold in Q1 2024¹.

4. Revenue Trends: Despite the positive figure of around $100 million in reported revenue for Model e, it represents an 84% drop compared to the first quarter of the previous year. This decline occurred even though sales were down by only about 20% relative to the same period in 2023¹.

The Culprits: Pricing Pressure and Expenses

1. Price Cuts: Ford attributes the revenue decline to “industry-wide pricing pressure.” The company’s decision to cut prices on its EVs in response to market conditions impacted the Model e division significantly. As the battery-electric space continues to grow, Ford faces the challenge of balancing competitive pricing with sustainable profitability¹.

2. Rising Expenses: Model e’s rising expenses compound the issue. However, some of this expenditure is directed toward the development of Ford’s next-generation EVs. The hope is that these future electric models will contribute significantly to Model e’s revenue figures¹.

Looking Ahead

1. Delayed Production: Ford has pushed back EV production at its BlueOval City facility to 2026 and delayed the launch of its three-row electric SUV. Instead, the company plans to focus on smaller, more affordable EVs. Hybrids will also play a role in Ford’s evolving strategy².

2. Optimistic Prospects: Despite the current challenges, Ford’s growth in the EV market remains promising. The success of the F-150 Lightning and the Mustang Mach-E demonstrates strong consumer interest. If Ford can strike the right balance between pricing, expenses, and innovation, the road ahead may lead to brighter financial results for Model e².

In summary, Ford’s Model e EV division faces an uphill battle, but strategic adjustments and continued investment in electrification could pave the way for a more prosperous future. The automotive landscape is shifting, and Ford must navigate these changes wisely to stay competitive in the electric revolution.

Image: Ford

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Disclaimer: The information provided is based on publicly available sources and does not constitute financial advice or investment recommendations. Always consult professional financial advisors for personalized guidance.¹²