Electric Vehicles

3094 readers

480 users here now

A community for the sharing of links, news, and discussion related to Electric Vehicles.

Rules

No bigotry - including racism, sexism, ableism, homophobia, transphobia, or xenophobia.
Be respectful, especially when disagreeing. Everyone should feel welcome here.
No self-promotion
No irrelevant content. All posts must be relevant and related to plug-in electric vehicles — BEVs or PHEVs.
No trolling
Policy, not politics. Submissions and comments about effective policymaking are allowed and encouraged in the community, however conversations and submissions about parties, politicians, and those devolving into general tribalism will be removed.

founded 1 year ago

MODERATORS

[email protected]

102

Ford cancels EV battery orders as losses widen to $130,000 per vehicle sold (www.notebookcheck.net)

submitted 4 months ago by [email protected] to c/[email protected]

37 comments fedilink hide all child comments

you are viewing a single comment's thread
view the rest of the comments

[–] [email protected] 43 points 4 months ago (11 children)

How could you ever fuck your production cost so much as to get losses like that.

It's because there is a lot of fixed cost being divided into a relatively small number of units. For instance "Ford Blue" is Ford's ICE division and in Q1 it moved about 626,000 units while "Ford Model e" is Ford's EV division and it only moved about 10,000 units in Q1. Source.

So if Ford Blue spends a Billion dollars that's a per vehicle cost of $1,597. If Ford Model e spends a Billion dollars its a per vehicle cost of $100,000.

So what would cost a Billion dollar? Well, how about 3 new battery factories plus an EV assembly factory that cost something like 7 Billion dollars?

That's not nearly all of it either. In May of 2021 Ford said that would spend something like 30 Billion by 2025 (that's next year!) to increase EV production.

So yeah, Ford has spent the GDP of some small countries shifting to EV production and when you divide those very large sums into a very small number of vehicles you get upside down real quick.

[–] [email protected] 10 points 4 months ago (7 children)

I dont think it would be fair to call that a loss per vehicle then. When they built their first vehicles long long ago they also mustve been in the red for a while. Thats called "investing in company infrastructure" and not "selling at a loss".

The money is paid, the loss of money is over. Surely they are making a per vehicle profit already and it will just take some time to go overall positive for their investment.

[–] [email protected] 8 points 4 months ago (5 children)

I dont think it would be fair to call that a loss per vehicle then.

It's common to break down the cost of Fixed Asset Investment to per unit produced by the investment. I won't comment on whether it's "fair" or not but it is common and it's how the article arrived at this eye popping "loss per vehicle" number.

[–] [email protected] 6 points 4 months ago (1 children)

This is why the incremental cost of a unit are often a better measure for longer term profitability and decision making than the unit average cost, especially when you aren't factoring in the market size and ability to repurpose sunk costs in that unit average cost.