Ford’s Mustang Mach-E Profit Wiped Out by Commodity Costs

[Footballfan]

I have always thought the ev thing has always been blown out of proportion. The very fact Ford is now losing money on each one is proof that profitability and affordability of evs are another major hurdle. If anything the vision of "all electric" futures are more likely to drag Ford and gm into bankruptcy than commitments to legacy vehicles. 

 

Edited June 19, 2022 by Footballfan

[akirby]

2 hours ago, jpd80 said:

OK, I’m play devils advocate here to explore a possibility…

 

What if Ford Blue was made into a completely  separate company?

Still earning profit but loaded down with all the debt while  all the good assets and cash on hand kept with Mach E

That doesn’t mean it would go bankrupt tomorrow but maybe at it natural conclusion in say ten years or so?

In the mean time, Model E could have an alliance arrangement with Ford Blue to continue existing arrangements but Ford Blue behaving like a supplier to Model E

 

 

Again, just exploring an alternate possibility….
 

Yes, Ford is planning to do exactly what you said but, how long is it going to take some bright spark accountant to work out a way of arranging those assets and BUs in a way where the continuing BU will never be required to pay off that $50 billion.

I know exactly what you’re saying, but if you spin off Blue you also spin off the cash machine that’s paying for everything.  Maybe once EVs are developed and making money and ICE sales are winding down but that’s a long way off.

 

They could do some minor stuff especially if they allocate shared resources but I just don’t expect any major shenanigans.

[jpd80]

1 hour ago, akirby said:

I know exactly what you’re saying, but if you spin off Blue you also spin off the cash machine that’s paying for everything.  Maybe once EVs are developed and making money and ICE sales are winding down but that’s a long way off.

 

They could do some minor stuff especially if they allocate shared resources but I just don’t expect any major shenanigans.

Just to extend the what ifs,

What if before splitting off Ford Blue, Ford took out a loan for a good portion of the BEV infrastructure and development costs and pinned that to Ford blue as guarantor for pay back, eventually setting them adrift by the end of the decade…..

 

I’ll stop now to give you final reply on this because I know it’s contorted logic and maybe I’m seeing an opportunity for something that won’t pass financial auditing, just kills me how GM took advantage of reorganisation……..

[akirby]

44 minutes ago, jpd80 said:

Just to extend the what ifs,

What if before splitting off Ford Blue, Ford took out a loan for a good portion of the BEV infrastructure and development costs and pinned that to Ford blue as guarantor for pay back, eventually setting them adrift by the end of the decade…..

 

I’ll stop now to give you final reply on this because I know it’s contorted logic and maybe I’m seeing an opportunity for something that won’t pass financial auditing, just kills me how GM took advantage of reorganisation……..

I do t think there is any way they could pull that off from an accounting standpoint.

[jpd80]

8 hours ago, Footballfan said:

I have always thought the ev thing has always been blown out of proportion. The very fact Ford is now losing money on each one is proof that profitability and affordability of evs are another major hurdle. If anything the vision of "all electric" futures are more likely to drag Ford and gm into bankruptcy than commitments to legacy vehicles. 

 

The cost of producing each Mach E is roughly $25,000 more than the cost of producing a similarly optioned Edge,

something is very wrong when a compact EV costs at least $44,000 to manufacture…….

 

Makes me wonder what are Lightning’s build costs versus a comparable F-150,

could they also be on the high side?

 

According to Jim Farley, the next Gen Lightning will save Ford around $6,000 on build costs,

I wonder if that’s why Ford is favouring higher more profitable trim levels in the current Lightning.

Edited June 20, 2022 by jpd80

[2005Explorer]

They can make their vehicles more profitable by talking to the Ranger team on how to de-content a vehicle while raising the price at the same time. ?

 

List of deleted items from 2019 to today.

 

1. no rear folding headrest
2. no hood struts(as of 2022)
3. no PRNDS light
4. no glovebox damper
5. no RANGER embossed into the Lariat seats
6. no console (pen) cubby
7. no 12V outlet in the console without 110v option
8. no bright trim rings on the 12v covers that matched the radio knobs
9. only 4 bed tie downs instead of 6 (as of mid 2019??)
10. no engine cover
11. no owners manual cover
12. Eco badge on tailgate
13. no plugs in the rocker panels
14. no ignition bezel (has always been missing)
15. steel front fenders (aluminum before) estimated after March 2021 and all 2022
16. no bright button on parking brake
17. no color keyed tailgate handle on Lariat just black plastic without chrome pkg.
18. no aluminum spindles, they're now steel
19. rear passenger doors no longer have external touch lock
20. front seat headrest tilt adjustment
21. (2) 4.2" productivity screens instrument cluster replaced with (1) 4.2" screen in Lariat 500A
22. Floor Mat mounting tabs on passenger side
23. no small cubby inside glove compartment to hold owners manual
24. no removable rubber pad at the bottom of the cup holder
25. no removable rubber mat inside the console storage area
26. Eliminated Auto Start/Stop feature ($50 credit)
27. Eliminated LED headlights on Lariat Trim ($500 credit)

 

 

[rperez817]

2 hours ago, 2005Explorer said:

26. Eliminated Auto Start/Stop feature ($50 credit)

 

This removal and credit would be nice for existing Ranger owners! The feature is annoying and useless for customers.

[jasonj80]

2 hours ago, 2005Explorer said:

They can make their vehicles more profitable by talking to the Ranger team on how to de-content a vehicle while raising the price at the same time. ?

 

List of deleted items from 2019 to today.

 

1. no rear folding headrest
2. no hood struts(as of 2022)
3. no PRNDS light
4. no glovebox damper
5. no RANGER embossed into the Lariat seats
6. no console (pen) cubby
7. no 12V outlet in the console without 110v option
8. no bright trim rings on the 12v covers that matched the radio knobs
9. only 4 bed tie downs instead of 6 (as of mid 2019??)
10. no engine cover
11. no owners manual cover
12. Eco badge on tailgate
13. no plugs in the rocker panels
14. no ignition bezel (has always been missing)
15. steel front fenders (aluminum before) estimated after March 2021 and all 2022
16. no bright button on parking brake
17. no color keyed tailgate handle on Lariat just black plastic without chrome pkg.
18. no aluminum spindles, they're now steel
19. rear passenger doors no longer have external touch lock
20. front seat headrest tilt adjustment
21. (2) 4.2" productivity screens instrument cluster replaced with (1) 4.2" screen in Lariat 500A
22. Floor Mat mounting tabs on passenger side
23. no small cubby inside glove compartment to hold owners manual
24. no removable rubber pad at the bottom of the cup holder
25. no removable rubber mat inside the console storage area
26. Eliminated Auto Start/Stop feature ($50 credit)
27. Eliminated LED headlights on Lariat Trim ($500 credit)

 

 

You forgot heated wiper park, power folding mirrors XLT , front parking sensor on XLT, B&O was Standard on Lariat and I'm sure there are many others.

 

Have to wonder if they will even bring equipment back or it is just gone for good with the new basic basic basic message that is being pushed. Farley likes to brag how much he can save by eliminating "Complexity" AKA features and then wonder why Ford has the quality issues they do because those cost savings ARE in components as well.

[akirby]

1 hour ago, rperez817 said:

The feature is annoying and useless for customers.

It’s only annoying to some people and it’s far from useless.  Saves me 1-2 mpgs.

[akirby]

42 minutes ago, jasonj80 said:

You forgot heated wiper park, power folding mirrors XLT , front parking sensor on XLT, B&O was Standard on Lariat and I'm sure there are many others.

 

Have to wonder if they will even bring equipment back or it is just gone for good with the new basic basic basic message that is being pushed. Farley likes to brag how much he can save by eliminating "Complexity" AKA features and then wonder why Ford has the quality issues they do because those cost savings ARE in components as well.

They can get away with that stuff on mass produced high volume vehicles sold out of inventory at (relatively) low prices.  If they want to reduce models, reduce complexity and maximize ATPs they really need to stop doing that.  The market should support higher prices on higher trims that should include most of those items.

[fuzzymoomoo]

1 hour ago, jasonj80 said:

You forgot heated wiper park, power folding mirrors XLT , front parking sensor on XLT, B&O was Standard on Lariat and I'm sure there are many others.

 

Have to wonder if they will even bring equipment back or it is just gone for good with the new basic basic basic message that is being pushed. Farley likes to brag how much he can save by eliminating "Complexity" AKA features and then wonder why Ford has the quality issues they do because those cost savings ARE in components as well.

Don't forget it never had things like a heated steering wheel and moonroof

Edited June 20, 2022 by fuzzymoomoo

[rperez817]

16 hours ago, Footballfan said:

Ford could not send a division onto bankruptcy.  Model E and Ford Bluexwould have to be separate companies to do that- much like gm did with Delphi. 

 

Good analogy with Delphi Footballfan. Delphi was spun off from General Motors in 1999 and filed for bankruptcy (Chapter 11) a few years later. Ford Blue may follow a similar path over the next 10 years.

[slemke]

3 hours ago, akirby said:

It’s only annoying to some people and it’s far from useless.  Saves me 1-2 mpgs.

Not sure it works anymore on the Aviator or I’ve just gotten used to it.  Either way, I don’t notice it anymore.

[slemke]

2 hours ago, rperez817 said:

 

Good analogy with Delphi Footballfan. Delphi was spun off from General Motors in 1999 and filed for bankruptcy (Chapter 11) a few years later. Ford Blue may follow a similar path over the next 10 years.

Ford did a similar thing with spinning off Visteon.  They had a few rough years, but I don’t think they filed for bankruptcy.  Once the profits of Ford Blue are sucked dry, I suspect it will follow in the Visteon path and be jettisoned.  Somewhere between 2035 and 2040 would be my guess.  Maybe sooner.  Then again, the whole company may go under if costs and quality don’t get under control.  This market allows some inefficient producers to exist.

[Gurgeh]

19 hours ago, Footballfan said:

I have always thought the ev thing has always been blown out of proportion. The very fact Ford is now losing money on each one is proof that profitability and affordability of evs are another major hurdle. If anything the vision of "all electric" futures are more likely to drag Ford and gm into bankruptcy than commitments to legacy vehicles. 

 

There's no intrinsic reason that the rapid pace of EV technological advancement wouldn't continue to drive down costs. Except, unfortunately, the ironic situation we now find ourselves in which environmentalists are both pushing for more government mandates and regulations to compel early transition to all electrics while also continuing to push litigation, government regulations, legal restrictions, and closing off of federal lands to impede the kind of mining needed to meet the greater demand for minerals and metals to support that transition.

Edited June 20, 2022 by Gurgeh

[blwnsmoke]

Huge article from one of the major electric companies in my area stating for customers to expect a 100% increase in electricity costs coming soon.  Already submitted to the PUC.

 

Price increases of the MachE coming soon, electric prices doubling coming soon..  

 

Definitely hard to justify going electric.

Edited June 20, 2022 by blwnsmoke

[fuzzymoomoo]

46 minutes ago, blwnsmoke said:

Definitely hard to justify going electric.

Hard to justify doing anything anymore

[jasonj80]

5 hours ago, akirby said:

They can get away with that stuff on mass produced high volume vehicles sold out of inventory at (relatively) low prices.  If they want to reduce models, reduce complexity and maximize ATPs they really need to stop doing that.  The market should support higher prices on higher trims that should include most of those items.

They are listening to very wrong people right now, dealers who are very vocal about needed cheap cars and only cheap cars. The problem is that they will never be cheap enough for the customers who want a nothing vehicle, with no profit and who will just find the next cheapest thing in 10-12 years when their last cheap thing dies. The Chinese are going to come in soon and eat up the low end of the market, leaving a smaller and smaller pie when you cater to customers with no brand loyalty.

The Maverick Lariat is an example of where they are going, no rear window defroster, no auto dimming mirror, no home link, no rain sensing wipers, no LED tail lights, no navigation system, no sync 4, etc.  (The CHMSL is going to be a class actions lawsuit soon, legally can't sell vehicles have features on the window sticker then build them without it)  It is like not bringing the Everest here, it would sell 120K units a year and wouldn't touch Bronco sales.

Electric cars are the future, the problem is Politicians decided that future was in the next 5 years and not the reasonable 2035-2050 time-frame. Expect a minimum of 10% increase in vehicle prices over each year over the next 3 years.  Politicians created this mess and they won't be able to fix it with the way it needs to be fixed. It is the 1970's all over again.

Edited June 20, 2022 by jasonj80

[akirby]

42 minutes ago, jasonj80 said:

They are listening to very wrong people right now, dealers who are very vocal about needed cheap cars and only cheap cars. The problem is that they will never be cheap enough for the customers who want a nothing vehicle, with no profit and who will just find the next cheapest thing in 10-12 years when their last cheap thing dies. The Chinese are going to come in soon and eat up the low end of the market, leaving a smaller and smaller pie when you cater to customers with no brand loyalty.

The Maverick Lariat is an example of where they are going, no rear window defroster, no auto dimming mirror, no home link, no rain sensing wipers, no LED tail lights, no navigation system, no sync 4, etc.  (The CHMSL is going to be a class actions lawsuit soon, legally can't sell vehicles have features on the window sticker then build them without it)  It is like not bringing the Everest here, it would sell 120K units a year and wouldn't touch Bronco sales.

Electric cars are the future, the problem is Politicians decided that future was in the next 5 years and not the reasonable 2035-2050 time-frame. Expect a minimum of 10% increase in vehicle prices over each year over the next 3 years.  Politicians created this mess and they won't be able to fix it with the way it needs to be fixed. It is the 1970's all over again.

I thought the Koreans had convinced them they couldn’t compete on price.  It looked like they were making progress with Explorer and others by making more things standard like push button start.  But I guess it’s still up to each vehicle manager how they do that.  This is where Farley needs to step in and make some across the board rules on minimum std equipment, etc.  I think the stripper models need to go or be fleet only.

[tbone]

9 hours ago, 2005Explorer said:

They can make their vehicles more profitable by talking to the Ranger team on how to de-content a vehicle while raising the price at the same time. ?

 

List of deleted items from 2019 to today.

 

1. no rear folding headrest
2. no hood struts(as of 2022)
3. no PRNDS light
4. no glovebox damper
5. no RANGER embossed into the Lariat seats
6. no console (pen) cubby
7. no 12V outlet in the console without 110v option
8. no bright trim rings on the 12v covers that matched the radio knobs
9. only 4 bed tie downs instead of 6 (as of mid 2019??)
10. no engine cover
11. no owners manual cover
12. Eco badge on tailgate
13. no plugs in the rocker panels
14. no ignition bezel (has always been missing)
15. steel front fenders (aluminum before) estimated after March 2021 and all 2022
16. no bright button on parking brake
17. no color keyed tailgate handle on Lariat just black plastic without chrome pkg.
18. no aluminum spindles, they're now steel
19. rear passenger doors no longer have external touch lock
20. front seat headrest tilt adjustment
21. (2) 4.2" productivity screens instrument cluster replaced with (1) 4.2" screen in Lariat 500A
22. Floor Mat mounting tabs on passenger side
23. no small cubby inside glove compartment to hold owners manual
24. no removable rubber pad at the bottom of the cup holder
25. no removable rubber mat inside the console storage area
26. Eliminated Auto Start/Stop feature ($50 credit)
27. Eliminated LED headlights on Lariat Trim ($500 credit)

 

 

How long before people stop accepting this?  I personally am getting to the tipping point with this stuff. I think people notice if they had an option before and it is subsequently removed on later model years. I’ve seen it on our 2022 Explorer and I suspect it has happened on our new F250.  The question that needs answered for comparison; are other manufacturers doing this same thing? If so, I guess people are screwed either way.  

[rperez817]

1 hour ago, jasonj80 said:

(The CHMSL is going to be a class actions lawsuit soon, legally can't sell vehicles have features on the window sticker then build them without it) 

 

Wow, that's crazy jasonj80. Is Ford really building and delivering to customers non-commercial vehicles that don't have a CHMSL? I thought that was mandatory per federal regulations on any passenger car or light truck and that a carmaker's inability to install CHMSL (or other mandated safety equipment) on new vehicles results in a "stop sale" scenario.

[jasonj80]

38 minutes ago, tbone said:

How long before people stop accepting this?  I personally am getting to the tipping point with this stuff. I think people notice if they had an option before and it is subsequently removed on later model years. I’ve seen it on our 2022 Explorer and I suspect it has happened on our new F250.  The question that needs answered for comparison; are other manufacturers doing this same thing? If so, I guess people are screwed either way.  

They are doing it now with covid, Ford does it all the time pre-covid. I’m not sure a glovebox light really takes anymore chips than a vehicle without one. 
 

GM just cancelled super cruise on the pickups last week ($2300 credit). The supply chain is actually getting much much worse as time is going on. 
 

21 minutes ago, rperez817 said:

 

Wow, that's crazy jasonj80. Is Ford really building and delivering to customers non-commercial vehicles that don't have a CHMSL? I thought that was mandatory per federal regulations on any passenger car or light truck and that a carmaker's inability to install CHMSL (or other mandated safety equipment) on new vehicles results in a "stop sale" scenario.

They have them - they are just listed as LED on the lariat window sticker and they are not LED on vehicles produced. You can’t put things on a window sticker and then sell the vehicle without that feature. It is actually why window stickers became required by law by Sen. Monroney. 

[HotRunrGuy]

2 hours ago, jasonj80 said:

 (The CHMSL is going to be a class actions lawsuit soon, legally can't sell vehicles have features on the window sticker then build them without it) 

 

Just to clarify, they are using an incandescent CHMSL, just not an LED one, correct?  The vehicle is still equipped with a CHMSL.

 

HRG

[2005Explorer]

5 hours ago, akirby said:

I thought the Koreans had convinced them they couldn’t compete on price.  It looked like they were making progress with Explorer and others by making more things standard like push button start.  But I guess it’s still up to each vehicle manager how they do that.  This is where Farley needs to step in and make some across the board rules on minimum std equipment, etc.  I think the stripper models need to go or be fleet only.

The problem is they aren't just stripping features out of the low end trim levels, but in some cases across the line. It's not just the Ranger either. Even the Bronco lost a few things from 2021 to 2022 (for example digital temp display on the temp selectors). Some have said the deletions are being done because of a parts shortage, but will those features ever come back? Doubtful. They haven't hit the Bronco as hard as the Ranger, but give it a couple more years. I would guess with inflation running as it is we will see a combination of more de-contenting along with price increases to maintain margin. What else can they do? They still have to remain price competitive with other mainstream brands.

[Gurgeh]

Could be worse. You could, for instance, be a company that makes nothing but EVs right now...

 

https://www.cnbc.com/2022/06/23/musk-says-tesla-berlin-and-austin-factories-losing-billions-of-dollars.html

 

"Tesla’s newest car factories in Texas and Berlin are losing “billions of dollars right now” as supply chain disruptions hamper the electric vehicle giant’s ability to ramp up production, chief executive Elon Musk said in an interview published Wednesday.

 

" 'Both Berlin and Austin factories are gigantic money furnaces right now. Okay? It should be like a giant roaring sound which is the sound of money on fire,' Musk said in the interview with Tesla Owners Silicon Valley, which was recorded on May 30. 'Berlin and Austin are losing billions of dollars right now because there’s a ton of expense and hardly any output. Getting Berlin and Austin functional and getting Shanghai back in the saddle fully are overwhelmingly our concerns. Everything else is a very small thing basically.'

 

"Musk said that the Texas factory is 'losing insane money' at the moment because of troubles ramping up production of cars with the so-called 4680 battery, Tesla’s latest technology. Meanwhile, the tools to make cars for the traditional 2170 batteries are 'stuck in a port in China.'

 

" 'Just been trying to keep the factories operating the last couple years has been a very difficult thing, like supply chain interruptions have been severe, like extremely severe,' Musk said.

'The past two years have been an absolutely nightmare of supply chain disruptions, one thing after another, and we are not out of it yet.'

 

"In China, a resurgence of Covid in recent weeks led to lockdowns in major cities such as Shanghai, where Tesla’s plant in the country is. Tesla plans to suspend most of the production at that factory in the first two weeks of July to carry out upgrades, Reuters reported on Wednesday."

Edited June 23, 2022 by Gurgeh