That's missing the forest for the trees. They're losing money on every vehicle they sell. There needs to be a lot more R&D to get the vehicles to a price point that consumers will purchase them and they can actually make a profit. Thus far, their R&D has been a net loss for the company.
I'm sure at least a good portion of it will pay off eventually, but there's no guarantee of how much, or how long it will take.
I'm not sure if that's necessarily a fair assessment as Ford's laid out plan to get from the current 40% loss to 8% profit is pretty reasonable.
Of that 40 percentage points, 20 of them are directly attributable to economies of scale. As they sell additional units those costs will amortize out. i.e. the more they sell the less they lose.
They expect to pick up another 15 points via engineering changes that will unify a lot of parts between the different product lines. They apparently initially just focused on shipping the vehicles so each model has a lot of bespoke parts that could semi-trivially be reworked to de-duplicate them between product lines.
That gets you down to 5% losses. The bulk of the remaining 13 points they expect to pick up via battery design improvements and cost reductions in their supply chain.
And their stated deadline for this is the end of 2026 so it's not exactly like they intend this to take ages. Rather they expect to achieve this within a handful of model revisions.
If you lose 4 billion on the first car you sell and 40k on the 10,000th that doesn’t necessarily mean you’re going to lose money on the 1,000,000th one you sell even if nothing else changes.
People talk about EV’s underperforming etc, but there’re still steady year over year increases. They are just about to break 10% market share, and everyone sees the writing on the wall.
Ford is cutting back production because they aren't seeing the necessary growth. Even if nothing else changes, they will continue to lose money selling them.
> They're losing money on every vehicle they sell.
Unless I’m missing it, neither article shows the profit/loss of manufacturing the vehicle vs sales revenue of the vehicle itself, so we can’t know that. Even if it’s true, it’s not unusual when bringing up a new product as you optimise for scale.
> There needs to be a lot more R&D to get the vehicles to a price point that consumers will purchase them and they can actually make a profit.
Does there? Maybe all of the retooling and new assembly lines are done, all the designs are finished? Maybe not and they still have R&D budget left? They are also not operating in isolation - If another company comes out with a cheaper battery then Ford can just buy it with minimal R&D, they don’t have to invent everything themselves.
> Thus far, their R&D has been a net loss for the company.
I mean, that’s R&D? It’s an investment. The alternative is to do nothing and end up like Nokia. Even if they are losing money on every vehicle, “shipping fast” is better than not shipping at all and they can control the numbers. Most people want the 2nd or 3rd gen when all of the bugs have been worked out, so having units on the road lets you learn what doesn’t work.
I'm sure at least a good portion of it will pay off eventually, but there's no guarantee of how much, or how long it will take.