Ford’s EV Unit Has Already Lost $2.5 Billion This Year

Good morning! It’s Monday, July 29, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

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Contents

1st Gear: Ford Loses $47,600 On Every EV Sold

Electric vehicle makers are trying their best to fill the market with battery powered cars that you might actually want to buy. This means plowing millions of dollars into building new factories, developing new designs and researching the kind of tech that will keep your car driving for hundreds of miles. All that investment could one day pay off, but right now its causing eye-watering losses for Ford’s EV department.

According to the company’s latest financial results, Ford’s EV division has lost a staggering $2.5 billion so far this year and it’s on track to lose double that by the end of 2024, reports the Telegraph:

The company posted a loss of $1.1bn for its electric vehicle division, Ford E – equivalent to about $47,600 per car. It sold 23,957 electric vehicles (EVs), an increase of 61pc from a year earlier.

Ford blamed a price war across the industry for the loss, which came despite efforts to slash costs by $400m.

The stark figures underline the huge sums of cash even mass market car manufacturers are burning through as they electrify their product line-ups. The $50,000 loss per car was first reported by industry expert Robert Bryce in his Substack newsletter.

The staggering losses for the Blue Oval follow similar sky-high deficits for other automakers across the EV space. Last year, it was revealed that Rivian loses more than $30,000 on every electric truck it sells and the average loss per EV sold across the American auto industry sits at more than $6,000 right now.

The losses are mounting particularly quickly as automakers race to cut prices in an attempt to draw new buyers into the space. These ever-growing cost cuts were kicked off by Tesla, which began slashing its prices last year forcing other players in the EV space to follow suit.

2nd Gear: Lamborghini Is Doing Just Fine

While electric cars are proving troublesome for many, Lamborghini is proving that a move to hybrid power doesn’t have to be quite so painful, even for a brand that built its name around screaming V12s. The Italian automaker saw revenue for the first half of 2024 jump by 14 percent as it continues its pivot to hybrid models, including the new hybrid Urus and the plug-in Lamborghini Revuelto flagship.

Lamborghini revenue reached $1.76 billion in the first half of 2024, reports Reuters. The boost came despite flat profits and falling margins for the Italian supercar maker:

The firm delivered 5,558 cars in the first half, up 4%, it said on Monday, putting it on course to beat last year’s record, when it topped 10,000 annual sales for the first time.

Supported by the success of its Urus SUV, costing over 230,000 euros, Lamborghini, part of Germany’s Volkswagen group , has in recent years expanded its output on solid demand from wealthy clients, gaining ground on rival Ferrari, which last year sold 13,663 cars.

“If we can maintain this trend, we are likely to exceed last year’s record,” Chairman and CEO Stephan Winkelmann said in written answers to Reuters questions.

The U.S. was the Italian brand’s biggest market for the six-month period, with more than 1,600 Lamborghinis delivered here so far in 2024. The company also sold well in the Europe, Middle East and Africa region, with it delivering almost 2,500 cars across the region in H1.

Dispite positive deliveries for the company, its profits remained stagnant as a result of heavy investment in hybridization at the company, reports Reuters. Lamborghini has invested heavily to launch a plug-in hybrid variant of its best-selling Urus SUV and also aims to have a fully hybrid offering by the end of this year.

The company still has ambitions to go electric in the coming years, reports Reuters, with work on an electric Lamborghini ongoing and the brand targeting a 2028 launch.

3rd Gear: In A World Of SUVs, Stellantis Still Can’t Sell Jeeps

While SUVs are selling like hot cakes at Lamborghini and almost every other automaker around the world, they aren’t proving to be the stone-cold sellout that American automaker Jeep might have hoped for. After struggling sales were reported by parent company Stellantis last week, Jeep has outlined issues of its own related to its aging lineup of cars.

Last week, Stellantis reported that net income for the first half of 2024 was down by 48 percent. Now, experts are warning that the losses are as a result of company boss Carlos Tavares’ commitment to cost cutting, a lack of innovation and an aging lineup of vehicles. As Bloomberg explains:

After years of earning envy-inducing profits by way of relentless frugality, Stellantis NV’s Carlos Tavares cut too deep.

The owner of the quintessential sport utility vehicle brand is having trouble selling Jeeps at a time when SUV demand has never been better. Its Ram pickup division has swiftly gone from challenging General Motors Co.’s Chevrolet to sliding in the sales rankings. The only model Chrysler is still producing is a minivan.

A relatively bare cupboard caught up with Stellantis in the first half of the year, culminating in a disastrous set of earnings results this week. At least seven senior executives have left the company since January, and its stock has plunged 40% from a record high reached in March.

In an attempt to try and rectify its misfortunes, Jeep and the wider Stellantis portfolio has a plan. This will start with price cuts for many of its models, following years of steadily increasing prices for the likes of the Jeep Compass and Grand Cherokee models. There will also be the launch of two new electric models in the coming months, as well as a return for the Cherokee, which was killed off last year.

If the rollout of these models goes smoothly, it’s hoped that the refreshed lineup and new offering from Jeep will help bring some buyers back to the brand and improve fortunes going forward.

4th Gear: Nissan Cuts Production As U.S. Sales Slow

Jeep isn’t the only brand that’s facing issues, and things are also looking worrisome for Japanese automaker Nissan. The company is reportedly planning a slowdown at some of its production facilities in Japan as it deals with slowing demand for its vehicles, reports Reuters.

Nissan is reportedly planning to slash output by a third at its largest Japanese plant, reports Reuters. The slowdown will hit some of its flagship crossover and SUV models as the automaker deals with slowing demand for older models:

The Japanese automaker on Thursday reported an almost complete wipe-out in April to June profit and cut its full-year outlook after it was forced to offer deep discounts in the U.S., highlighting the deepening risk it faces in its largest market.

Unlike rivals Toyota and Honda, Nissan doesn’t offer hybrid models in the U.S. and therefore hasn’t benefitted from recent upswing in demand from U.S. consumers for hybrids as enthusiasm around EVs has cooled.

The car maker now plans to produce just under 25,000 vehicles at its Kyushu plant in southwest Japan this month, according to two people with knowledge of the situation. Both declined to be identified because the information isn’t public.

The 25,000 cars produced at Kyushu includes roughly 10,000 Rogue crossovers that are destined for export, reports Reuters. That target is about half the output that Nissan had initially planned for July.

Struggling sales for the Rogue are as a result of aging inventory that’s filling up dealerships, reports Reuters. Nissan is still sitting on a stockpile of 2023 models that it needs to clear before it can start selling the updated 2024 Rogue in earnest.