Each of the 36,000 EVs Ford sold during the third quarter of this year lost the company $36,000.
While it would seem that the EV market is currently growing day by day, there are however some signs that this once sky high demand might soon be beginning to slow. And the most recent sign of this comes from Ford, which warned of cooling EV demand after the automaker withdrew its full-year sales forecast.
In a move that sent Ford’s share price tumbling by over 4% in after-hours trading, the automaker has further cited that its decision to withdraw its full-year sales forecast comes also from uncertainty over the pending ratification of its deal with the United Auto Workers (UAW) union. The Blue Oval recently reached a tentative agreement with the union on Wednesday to implement a 25% wage hike for 57,000 workers over the next four and a half years, ending a strike at some of the automaker’s biggest factories.
According to Ford’s Chief Financial Officer John Lawler, this newly inked contract will apparently add $850 (RM 3,800) to $900 (RM 4,300) in labour cost per vehicle, which will hence further will impact its competitiveness in the EV market. Lawler further added that like many of its competitors, the company is “trying to find the balance between price, margin and EV demand”.
Ford has previously stated for its EV business to currently be experiencing ‘sharply compressed’ prices and profitability, with the automaker further citing for customers to not be willing to pay a premium for all-electric models relative to comparable combustion and hybrid counterparts. The company announced that it loses an estimated $36,000 (RM 172,000) on each of the 36,000 electric vehicles it delivered to dealers in this third quarter of the year, which is even more than its estimated $32,350 (RM 155,000) loss per EV during the second quarter.
Moving forward, Ford has since announced that it will be scaling back about $12 billion (RM 57 billion) in planned EV investments. Citing the need to appropriately balance the pace of EV investment with the pace of customer demand, the Blue Oval will be cutting some Mustang Mach-E production and delaying one of two battery plants it plans to open in Kentucky with partner Sk On.
The automaker has since also reiterated its previously announced plans to slow its ramp up in the fully electric models, with it instead to focus on quadrupling sales of gas-electric hybrids over the next five years. Though interestingly, the Blue Oval still nevertheless announced for it continue with the planned launch of a new three-row utility and full-size pickup EV in the future.
This move by Ford in revising down its EV ambitions comes hot off the heels of its competitors General Motors who have themselves also recently recalled its 2023 results forecast earlier this week, in addition to walking back its often-repeated expectation of building 400,000 EVs by mid-2024. It is however worth pointing out that not all automakers are suffering from a slowdown in EV sales, with Tesla for instance having once again recorded its highest ever quarterly global sales figures last quarter with 435,059 cars sold.
The Volkswagen Group meanwhile sold 209,394 EVs worldwide this past quarter, which marked a 41% jump from the period last year. Though even this pales in comparison to BYD, whose 431,603 cars sold in the third quarter of 2023 marked a staggering 67% increase over the same time last year.
So now with this in mind then, it does beg the question as to whether there is actually a slowdown in general EV sales, or are the legacy American automakers, despite their recent projected bravado in wanting to dominate this new all-electric space, still struggling to keep offer products that will keep its customers from going to other marques?
