Ford's Cost to Build the Mach-E Increased $25,000 Per Car Due to Battery Prices Skyrocketing

Ford Mustang Mach-E GTImage: Ford

Ford is preparing for an economic downturn, at least according to the automaker’s CFO. The company has recently seen record profits with strong demand from vehicles like the Maverick, Mustang Mach-E, Bronco, and F-150 Lightning. But as CNBC News reports, like most Americans the company isn’t immune from the effects of inflation.

Ford made money in 2021, raking in nearly $18 billion in profit. Granted a lot of that was on the back of its stake in Rivian, but still, people want what the brand is selling. In January of this year alone, Ford sold nearly 155,000 vehicles. They’re selling them faster than they can make them, despite having to raise prices to offset inflation.

While this has helped the company’s profit margins, not everything is immune. Speaking at a conference hosted by Deutsche Bank, Ford’s CFO John Lawler stated how inflation has affected the company, namely the Mustang Mach-E. He added that even though the company raised the price of the Mach-E with the rest of its lineup to offset inflation, the double squeeze of rising battery materials costs and inflation gobbled up the Mach-E’s profits. While Lawler didn’t state how much the company could be potentially losing at this time on every Mach-E it sells, he stated that costs for the EV gone up to the tune of $25,000.

Mind you, this price is with no options. Screenshot: Ford

In a sign that the gravy train could stop running at any time, Lawler stated that the Ford is taking steps to prepare for an economic downturn. The main sign of things to come? Late car payments. Lawler said Ford Credit, Ford’s vehicle financing arm, has started to see more and more late payments. I guess those 84-month loans Ford defaulted to on some models weren’t a good idea after all. And while Lawler reassured that the company is in a better position for an economic downturn than before, if the economy does tank a bit, automakers and consumers are going to get hit hard.

Automakers have been pouring billions into an EV transition. Many could be in the same position as Ford with inflation eating up profits as manufacturing costs rise. And with vehicle prices higher than ever, and consumers taking out longer and longer loan terms to finance them (and the markups that dealers have been placing on them), this all has the potential to get really bad before it gets better.