Despite the reduction in orders, Ford continues to maintain partnerships with its battery suppliers, which include South Korea's SK On and LG Energy Solution, as well as China's Contemporary Amperex Technology, people who asked not to be identified told Bloomberg.
Reduce EV spending by $12 billion
Reduction in battery orders is part of Ford's electric vehicle strategy, which includes cutting $12 billion in spending on battery-powered models. The strategy includes delaying the introduction of new electric vehicles, cutting prices, and postponing and scaling down planned battery factories.
Ford forecasts losses on electric vehicles of up to $5.5 billion this year. CEO Jim Farley recently said that its EV unit, the Model e, is currently a major obstacle to company-wide growth.
As electric vehicle prices fell and demand weakened, Ford's loss per electric vehicle produced in the first quarter of this year exceeded $100,000, more than double the deficit from last year, one Bloomberg source said.
Bloomberg Intelligence estimates that the losses Ford expects to incur at its EV unit this year will come close to wiping out profits made by its Ford Blue unit, which produces traditional combustion engine vehicles such as the Bronco SUV and hybrids such as the Maverick truck .
Problems plaguing the EV industry
The reduction in order volume is a new sign of the problems plaguing the industry. U.S. automakers are struggling with low demand for electric vehicles, which continues to fall short of expectations. Meanwhile, battery makers' warehouses in South Korea, China and other countries are swelling with unsold inventory.
This in turn has even further impacts up the supply chain, impacting the prices of key metals such as lithium, cobalt and nickel, which have hit multi-year lows this year. Falling prices of raw materials caused investment decisions on new projects to be suspended and, in some cases, even led to the closure of mines.
Tesla's price war is killing Ford's EV
Ford officials say they have lowered the cost of their electric vehicles to increase their profitability, but at the same time they have also had to cut prices to stay competitive with market leader Tesla, which has aggressively lowered the prices of its models.
“We have observed enough dramatic price drop and therefore we have not been able to keep up from a cost reduction standpoint,” Ford Chief Financial Officer John Lawler told analysts on the company's April 24 earnings call.
According to Bloomberg, Ford is accelerating the development of small electric vehicles, the prices of which will start from PLN 25,000. dollars, The new model is scheduled to debut at the end of 2026. Farley said these models will be profitable within their first year on the market.
