Ford Motor has just given a figure that this year’s electric vehicle business will lose 4.5 billion US dollars, equivalent to RMB 32.1 billion! Not only is it much higher than the previous estimate of $3 billion, but it is also more than double the loss ($2.1 billion) last year.
The American auto giant’s electric vehicle division, the “Ford Model E,” has lost $1.8 billion this year, and losses will expand visibly in the second half of the year.
What is the concept of losing 32.1 billion a year?
Let’s take Wei Xiaoli as a comparison. Weilai, which has always focused on investment and service, had a net loss of 14.4371 billion last year, which was an increase of 259.4% over the previous year, while Xiaopeng Motors lost 9.14 billion last year, ideally even less. 2.03 billion.
It is indeed very difficult for traditional car companies to transform to electrification, but they did not expect the cost to be so high. And not long ago, Ford China was revealed to have laid off more than 1,000 employees…
- Selling a tram loses 270,000 CNY
In Ford’s various businesses, the electric car became a dragging department.
Because apart from the tram business, other businesses are doing very well. In the second quarter, Ford Motor’s total revenue reached US$45 billion, a year-on-year increase of 12% over the US$40.2 billion revenue in the second quarter of last year, and its net profit also increased to US$1.9 billion, with a profit margin of 4%, almost It was three times higher than the same period last year, with adjusted EBIT of $3.8 billion.
Source: Ford
In the first half of 2023, Ford maintained its growth momentum, with total revenue increasing by 16% year-on-year to US$86.4 billion, adjusted EBIT of US$7.2 billion, a year-on-year increase of 20%, and net profit of US$3.7 billion. It lost $2.4 billion over the same period.
Moreover, Ford’s total sales increased by more than 11%, once again becoming the quarterly champion of US brand sales, and it is also the best-selling auto brand in the United States in the first half of 2023.
Based on the performance in the first half of the year, Ford also raised its guidance for 2023, with full-year profit expectations raised to $11 billion and $12 billion, up from $9 billion to $11 billion previously, and adjusted free cash flow at $6.5 billion. to 7 billion US dollars, higher than the previous 6 billion US dollars.
The traditional fuel vehicle business is still Ford’s absolute engine, contributing more than 60% of its earnings before interest and taxes. In the second quarter, Ford Blue (commercial vehicle division) generated $25 billion in revenue, up 5 percent year-over-year, while Ford Pro (commercial vehicle division) totaled $15.6 billion, up 22 percent year-over-year.
Source: Ford
In the same period, the revenue of the electric vehicle department (Model E) was only US$1.8 billion. Although it increased by nearly 40% year-on-year, the operating loss was as high as US$1.08 billion, and the operating profit margin was -58.9%.
Therefore, the outstanding performance of fuel vehicles completely conceals the losses in the electric vehicle business.
And Ford estimates that the electric vehicle business will widen its losses to $4.5 billion this year due to the changing pricing environment, new investments and other costs, which is 50% higher than its previous forecast. Ford Motor CEO Jim Farley admitted that the adoption of electric vehicles has been slower than expected.
Throughout the first half of the year, the global sales of Ford Model E were 47,000 units, bringing in only US$2.5 billion in revenue. In addition to the investment in new models and production capacity of electric vehicles and other costs, Ford’s electric vehicle business lost US$1.8 billion in the first half of the year. , which means that Ford will lose $38,000 (about 270,000 CNY) for every electric car sold.
Source: Ford
As China is a “battlefield for military strategists” in the auto industry, Ford’s performance in the country is enough to show that Ford’s electric car business is struggling.
According to the latest retail data from the Passenger Federation, in the first half of 2023, the sales of Ford electric horses were 3, 84, 283, 332, 249, and 231 respectively. Dianma followed up the domestic price war one after another, and the data after two sharp price cuts.
In 2022, the annual sales of Ford Mach-E in China will only be 4,860, which is less than one-eighth of the sales in the United States, and it is not even as good as the monthly sales of many new domestic car companies.
- Lay off staff, change leaders, and make efforts to mix things up
In order to complete the electrification transformation, Ford is also actively helping itself.
In January of this year, due to the huge pressure in the global market, especially in the Chinese market, it reached a difficult point. So Ford chose to cut about 3,200 jobs in Europe, including more than 2,500 product development positions and as many as 700 administrative positions.
In order to maintain the competitiveness of the electric vehicle market, Ford said it will continue to cut jobs in Europe, planning to lay off 3,800 people in three years.
Source: Ford
Not only in Europe, but in early May this year, it was reported that Ford would also conduct a round of layoffs in China, mainly from Ford China and Ford Nanjing R&D Center, with a total of more than 1,300 people, while Changan Ford will lay off about 3,000 people. This is also part of Ford’s “downsizing plan”.
In response to this news, Ford China subsequently responded that Ford is planning to build a more streamlined and flexible organizational structure, “to invest resources in our core business with advantages, and strive to achieve business goals in China.”
Ford CEO Jim Farley said in an interview with the media that he will not withdraw from the Chinese market like other companies. In other words, Ford’s challenge in the Chinese market has just begun.
Source: Ford
In 2022, Ford’s sales in China will be 496,000, a year-on-year decrease of 33.5%, and its market share will be further squeezed to 2.1%. Ford sells fewer than 5,000 electric vehicles a year.
In order to boost sales, in September last year, Ford China announced that it would operate its electric vehicle business in China through an independent company, Ford Electric Mach Technology.
Not only has it invested in the business, but Ford has also undergone a high-level change. On February 24 this year, Ford China announced that Chen Anning, the president and CEO of Ford China, decided to retire. The current managing director and chief operating officer of Ford China, Wu Shengbo, has He will officially take over as President and CEO of Ford China from 1st, and will report directly to Jim Farley.
Earlier, in July last year, in order to ensure the production capacity of power batteries and the supply of raw materials, Ford achieved a series of strategic cooperation. 70% of the target Do a good job in the fixed-point work of supporting power batteries.
Ford also said it will spend more than $30 billion on electrification, including battery development, by the end of 2025.
Obviously, in order to make a profit in the electric vehicle market, Ford began to do its best. But in the early days of business, losses are still hard to avoid.
Or in order to accelerate profitability, Ford began to make efforts in the hybrid market. At the site of the second-quarter earnings report, Ford revealed that more than 10% of F-150 pickup customers have chosen hybrid models, and this proportion is still increasing.
Source: Ford
Ford also offers a hybrid version of the smaller Maverick pickup that has been more successful, with more than half of Maverick buyers opting for the optional $1,500 hybrid system over the standard four-cylinder engine.
In order to meet demand, Ford said that it will launch more types of hybrid models in the future.
- It is not so easy to build a tram
Burning money, making ends meet, and tight supply chains, the pitfalls of these new forces, traditional car companies have not fallen behind.
Ford is not the only one facing obstacles in the electrification market. The Japanese, Korean and German cars that were all the rage in the market in the early years have been a step behind in the transformation of electrification, which has also led to the continuous squeeze of market share.
Source: Ford
The most intuitive example is Toyota. All Toyota executives bombarded electric vehicles, but the team is still rolling in on battery life. A while ago, it also announced that it has made significant progress in solid-state batteries. It takes less than ten minutes to charge and has a battery life of 1,200 kilometers.
The era of electric vehicles has arrived. Even if Toyota is stubborn, the fact is that as long as it is a step slower, it will be squeezed out of this track.
A few days ago, the Volkswagen Group joined hands with Xiaopeng Motors, which was called a historic moment. A foreign-funded traditional car giant and a new Chinese force that has been established for 9 years have come together under the impetus of the times.
In this cooperation, Xiaopeng is responsible for the development of the vehicle platform, smart cockpit and smart driving system, and Volkswagen will provide the world’s leading engineering and supply chain capabilities.
Obviously, the German car giant has taken a fancy to Xiaopeng’s autonomous driving research and development capabilities. While successfully holding hands with Xiaopeng, Volkswagen also held hands with SAIC.
Source: Volkswagen
Therefore, it is difficult for an elephant to turn around, and it is difficult for a big ship to turn around. The poor performance of Ford’s electric vehicle department is also a microcosm of the transformation of the entire traditional auto giants.
Why do these century-old car companies fail in electric cars?
From the perspective of the supply chain, after decades or even hundreds of years of operation, these traditional giants have already reduced the cost of each supply chain link to the extreme. In this state, the profits are undoubtedly the most lucrative.
However, under the influence of the new energy wave, the giants are bound to re-open the production line of new energy vehicles, which will not only reduce the production capacity of fuel vehicles, but also have to re-arrange the entire supply chain. This makes these traditional giants have to face a brand new ecology where they have no bargaining power, which is hard to think about.
In addition, after decades of accumulation, traditional corporate thinking and rigid internal mechanisms have also become constraints for these giants.
These giants have also thought about grafting their advantages on traditional fuel vehicles to new energy vehicles, that is, oil-to-electricity conversion, but facing the new forces that are almost full of “innovation”, these models are not competitive, and consumers will naturally not pay the bill.
New energy vehicles cannot stand without breaking, and the Nokia moment in the automotive industry has come.
This article is from the WeChat public account: SuperEV-Lab (ID: SuperEV-Lab), author: Wang Lei Cao Tingting
