Nov
20
How do you want to look at the electric vehicle picture? If we look at just the EV portion of some of the largest automakers in the world, we see this sector loses money on every model sold. Still, despite these losses, most automakers, such as Ford, Stellantis, and GM, post record car sales profits year after year. Does this mean they’re really losing money on every EV sold?
Reports are that automakers like Ford lose money on every EV sale
When automakers break down the numbers to find places to cut losses, the EV sector would be dropped like a bad habit if it wasn’t so new. When automakers change generations of a model, that first model year typically loses hundreds of thousands of dollars until the vehicle recoups the investment money, but electric cars offer a unique challenge.
Ford reported losing $1.3 billion in its third quarter this year, which is a more significant loss than the $1.1 billion lost during Q3 2022. The Autopian reports this could translate to an entire year loss of $4.5 billion for the EV section of Ford. This is likely because electric vehicles are developing and evolving too quickly for sales to absorb the investment costs.
Why could big car companies accept this?
Some big car companies entered the EV sector knowing they would lose money on every sale. In fact, Ford estimated losses for every Ford F-150 Lightning sold, but those losses were actually greater than expected. Chevy initially deleted the Bolt because it wasn’t profitable but brought it back. Stellantis is ready to go full speed ahead in the electric vehicle sector, with the Ram 1500 Revolution EV pickup truck heading to market next year.
Some large auto companies aren’t quite as aggressive as the Detroit Big Three. Toyota is hesitant to enter the market as aggressively, holding back to see where the electric vehicle industry goes. Ford has also since slowed its movement toward adding more electric cars, looking for ways to make EVs profitable before debuting more nameplates.
Most large car companies can accept predicted losses in the EV market because it’s growing, and profits are still being made in other areas. According to an NPR interview between Ayesha Rascoe and Camila Domonske, both GM and Stellantis report larger-than-expected profits overall, despite the negative cost of EVs.
Is everyone losing money on electric cars?
Not all car companies are losing money in the electric vehicle sector. It seems that EV-only companies, such as Tesla and BYD, have reported impressive profits. In fact, Tesla recently lowered the price of its electric cars, making them much more affordable and forcing other automakers to lower prices on their electric vehicles to compete.
Traditional automakers could eventually find a way to turn profits on electric vehicles if a cost-saving breakthrough is made in the EV market. Some expect solid-state batteries to be that breakthrough, enabling traditional brands to lower the cost of making batteries.
Until cost-saving technology is available, traditional automakers must continue to spend money and absorb the losses to stay competitive with names like Tesla, Rivian, and BYD. The name recognition of Ford, Chevrolet, Cadillac, Ram, and Dodge should bring consumers to the Detroit Big Three before an EV-only automaker, but only if the traditional brands continue to expand their EV lineups and offerings.