New information from Ford shows that the road to electric vehicle profitability is filled with potholes.
Ford has projected that in 2025, it will lose up to $5.5 billion on its electric vehicle and software divisions. according to Reuters.
The automaker said that the loss will be comparable to the fiscal bath the company took on electric vehicles in 2024.
ABC reported that Ford lost $5.08 billion on EVs in 2024.
According electrek.co, Ford’s EV unit lost $1.4 billion in the fourth quarter of 2024.
Despite the drag of EVs on company performance, it achieved a fourth-quarter profit of $1.8 billion, Reuters reported.
Slow sales on electric vehicles led Ford to put off an electric SUV and an electric version of its popular F-150 truck.
Sherry House, Ford’s incoming chief financial officer, noted that Ford is putting a greater focus on hybrid vehicles.
Ford sold 187,426 hybrids in 2024 against 97,865 EVs in 2024.
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Demand for EVs is not what its supporters hoped, according to the Los Angeles Times.
Sales of electric vehicles in 2024 rose only one percent in California.
That’s a problem for companies trying to meet state mandates that require 35 percent of sales be zero-emission vehicles in the 2026 model year,
“The data don’t lie,” said Brian Maas, president of the California New Car Dealers Association.
“The demand doesn’t match what the mandate requires. It’s just that simple,” he said.
Automakers who fail to meet the state’s mandate could pay fines of up to $20,000 for every vehicle sold above the mandated level.
Maas predicted carmakers will use inventory control to meet state rules by limiting what customers can buy.
“Arizona and Nevada dealers could be flooded with internal combustion vehicles,” he said, while California residents would have fewer options and likely face higher prices.
“After the pandemic, there was a huge exuberance around EVs, and I think a lot of the manufacturers thought that growth was going to continue,” said Arun Kumar, a partner and managing director at AlixPartners, a consulting firm, according to The New York Times.
“But the reality is that’s not the case, and it’s a smart move to make sure you’re not losing market share in internal combustion,” he said in commenting on Ford’s decision to focus less on EVs in the future.
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