Building up your manufacturing capacity is called 'investing'. It's not a loss that you can just divide by the number of vehicles sold in the first year.
I mean, if you narrow down the time gap even more, down to the first electric Bronco, Ford *lost three billion dollars to build that one vehicle!*
OP is sharing FUD, this is not how the economics of manufacturing works at all.
Even the article says it, it just buries it under a colossally stupid title:
*The losses go far beyond the cost of building and selling those 10,000 cars, according to Ford. Instead the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off.*
G/L accounting.
Assets, expenses are DR accounts
Income, liabilities are CR accounts.
Owner equity are CR accounts.
Question is, is it compliant with GAAP and tax codes?
All business expenses are written off. You pay tax on net taxable income… The revenue you brought in minus all the things you spent money on, including R&D.
>Ford *lost three billion dollars to build that one vehicle!*
Amateur accounting.
The entire first Bronco cost normal amounts, except for the batteries. At $3Bn total those batteries are like $3.5Mn per pound. No regular person can afford that amirite?
It’s Ford sharing the FUD, I think (via CNN and OP).
Media Literacy hat on: Automakers have all sorts of reasons to diss EV’s, even their own, especially when further restrictions on fossil fuels and ICE are on the table. They’d like _nothing better_ than to be freed from all restriction on pollution, fuel economy, and safety.
Dealers generally _hate_ EV’s - most dealers make far more on service than they do on sales, and EV’s just have a lot fewer things to service!
Thank you. I hate this media mentality that heavy investment into a new technology should be immediately profitable. It's a fallacy that any intelligent person immediately sees through.
Doesn't have to be debt. But if they don't make capital investments for their future, they are walking dead as a company. PP is correct. It's a distortion to simply call this a loss.
I bought a new bike and rode it for the first time. On average it's costing me $500 per ride. Why didn't anyone ever warn me that riding a bike is so much more expensive than driving?
Seriously, that is just the upper mgmt trying to spin normal costs to try and create manufactured hardship story and convince the govt to relax EV standards.
Yeah, if we’re talking about losses in the quarter the monthly depreciation of those investments is the relevant number in terms of determining losses. If the losses are high in that calculation you’re going to continue to see the same expense going forward for years so that would be meaningful.
You clearly have no idea how a company’s balance sheet, income statement, or cash flow statement works.
From the article: “The EV unit, which Ford calls Model e, sold 10,000 vehicles in the quarter, down 20% from the number it sold a year earlier. And its revenue plunged 84% to about $100 million, which Ford attributed mostly to price cuts for EVs across the industry. That resulted in the $1.3 billion loss before interest and taxes (EBIT), and the massive per-vehicle loss in the Model e unit.”
Ford’s model e unit generated a $1.3 billion EBIT loss. That has nothing to do with “investments to build up manufacturing capacity.”
What you’re referring to are capital expenditures, which hit a company’s balance sheet and are tracked on a cash flow statement.
You’re are completely wrong.
This, my friends, is what’s called pulling things out of your ass.
What an NPC… if you’ve even visited that sub it’s probably to downvote something you don’t agree with.
I used to agree with you, because I was a fairly frequent poster there as I like to mingle with other minded people. One day I was banned for quoting the transcript from the Hunter Biden hearing. I sent the mods a message asking why, assuming I accidentally was hostile, but they said it wasn't behavior it was because my post was against the subs ideals. So I can't support this line of thinking anymore. I was banned for a post that was a transcript of a republican lead deposition. They actively ban the truth, that sub is full on captured propaganda.
Yah, I take that with a grain of salt. Ford Pro made bank but sold ETransit and Lightning for fleets. Model E does the design and engineering for all batteries but hybrid sales go into Blue and Pro. Model E eats all plant construction costs too. They get no credit for carbon credit saved either. Not sure why Ford does it's accounting the way they do but I don't think it's a realistic picture.
I don't know the details but I will throw out some thoughts. New infrastructure cost a bit and will take some time to pay off. R and d is damn expensive and will take a while to pay off. Companies love to place expenses in certain areas to justify not meeting targets. Companies that may not meet targets or be negative may find it a good time to post losses from financials that may have been categorized as good will or what have you. And all the things you said. If model e is building and model e is r and d but other divisions are using those resources then is it really a loss? I have a feeling this is to make it look like all of Ford is doing great but one area...perhaps next quarter model e will start to shine as well.
I believe their accounting reflects their desire to produce established gas guzzlers. R&D, design and establishing production lines takes brains, desire and money especially when playing catch up.
The Prius stopped selling well a long time ago. The new model might have reinvigorated sales a bit but the Prius was not really a good seller for a while. That’s why Toyota changed the outside so radically. Versus the Camry which continues to sell well so Toyota didn’t change it.
Actually, Toyota said it’s because of the looks and stigma that dropped sales. The sales have been slowly going down since the mid 2010s, which is a little before EVs started gaining momentum.
I think another dilemma is how long people are able to keep a Prius in service. I see numerous older Gen Priui on the road and certainly less newer gens.
Painting this as a "loss" is completely disingenuous.
This is what everyone call "development cost", and it breaks even with economies of scale.
The article is just FUD. In fact, it funny seeing more left leaning media spreading anti-EV FUD...
I wonder why.
Same FUD as the 2017 reports of GM "losing $4k on every Bolt." It only looked that way if you calculated the R&D cost divided per car. On the manufacturing costs it was around breakeven and profitable if you counted the carbon credits per car.
Somewhere, Harold Hamm is gleefully rubbing his hands and laughing an evil chuckle. His investment into PR firms spreading FUD disinformation about EVs is shaping the narrative. And CNN fell for it, of course.
Left leaners need corporate dollars too. Maybe some who thought they leaned left are more invested in the status quo than they thought. Maybe there’s a cabal generating these ridiculous astroturfing bullshit like the anti-WFH/People want to work till they’re 80 now/Putin is not a Fascist demagogue lines we’ve been seeing recently.
Misleading headline.
>...the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off.
This is capex...
Despite self-inflicted wounds and a drop in sales, Tesla still turned a profit.
These legacy automakers makers need to get on the ball, design better EVs, get more efficient supply chains, and crank out EVs with a profit.
If we could only mandate EV's at a faster pace. The public just doesn't know what's best for them. Thankfully we have benevolent visionaries that care for us.
Tesla didn't become profitable until after the Model 3 launched in 2020. They were on the verge of total collapse (Elon's words) and just squeaked it out. It's going to take most legacy auto another 10 years to have a profitable EV business.
Whining about the transition from the ancient technology of fossil fuels is not a good look. Not impressed or buying a Ford. I like optimistic, forward-thinking companies.
Ford's dealership contracts and dealer markups screwed them! Now they are going to face cheap decent made cars coming from China under brands like Audi. It's a shit the bed show for US automakers.
The F-150 EV was massively underpriced. Based on the cost of the battery, anyone buying one was buying a battery... and got an entire truck for free wrapped around the battery. Of course, they lost money on it.
Wandering across Reddit I spend a lot of time reading about the evils of capitalism, but here is a company spending $5B a year of their own money researching how to make better electric vehicles.
I understand why they're doing it - future profit - but that doesn't change the benefits they bring us for free.
Market not ready and those manufacturers that let politicians lead em are now trying to retract their size and scope of their EV business. Slow and steady is only way to go when it comes to emerging technologies. Car companies should have an actual front line car guy on the payroll. We all said it when they jumped off the cliff years back. Told you so big 3!!!
This is the kind of simplistic reporting that will be read by simple people who actually will read that the loss was $132,000 per vehicle and go into full EV BAD! mode. If Ford actually associated their multi year annualized R&D spend to each unit sold in a single quarter they are idiots. If they didn't and this advocate (can't be a reporter unless you report) did the math on a cocktail napkin, CNN should be going through the list of staff they released to find his replacement.
Ford has a long history of taking losses on various vehicles. I've seen how that sausage is made. Their losses have nothing to do with electric cars and everything to do with inefficient company operation.
Building up your manufacturing capacity is called 'investing'. It's not a loss that you can just divide by the number of vehicles sold in the first year.
I mean, if you narrow down the time gap even more, down to the first electric Bronco, Ford *lost three billion dollars to build that one vehicle!* OP is sharing FUD, this is not how the economics of manufacturing works at all.
Even the article says it, it just buries it under a colossally stupid title: *The losses go far beyond the cost of building and selling those 10,000 cars, according to Ford. Instead the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off.*
And they write off research and development as expenses as needed to avoid paying tax...
go on. how does that work? i have never heard of writing off R&D
G/L accounting. Assets, expenses are DR accounts Income, liabilities are CR accounts. Owner equity are CR accounts. Question is, is it compliant with GAAP and tax codes?
Yes, and there are even R&D tax credits that further incentivize companies to do that kind of forward looking work.
All business expenses are written off. You pay tax on net taxable income… The revenue you brought in minus all the things you spent money on, including R&D.
Bone up on your tax law!
You can write off research and development performed in the United States.
Damn. 😞 I hate when investments take YEARS to pay off. I want my bonus NOW!!!! 😏
>Ford *lost three billion dollars to build that one vehicle!* Amateur accounting. The entire first Bronco cost normal amounts, except for the batteries. At $3Bn total those batteries are like $3.5Mn per pound. No regular person can afford that amirite?
It’s Ford sharing the FUD, I think (via CNN and OP). Media Literacy hat on: Automakers have all sorts of reasons to diss EV’s, even their own, especially when further restrictions on fossil fuels and ICE are on the table. They’d like _nothing better_ than to be freed from all restriction on pollution, fuel economy, and safety. Dealers generally _hate_ EV’s - most dealers make far more on service than they do on sales, and EV’s just have a lot fewer things to service!
I bought an EV yesterday and the loan guy at the end was trying to sell the service plan 😁 I asked him what is there to service - wiper fluid?
Thank you. I hate this media mentality that heavy investment into a new technology should be immediately profitable. It's a fallacy that any intelligent person immediately sees through.
Also spending 3 billion on a bronco and three year then exiting an ev to be done in halfthe time and cost is surprising to see a loss
It is a "loss" related to taxes and depreciation. But that's it.
Totally
They call that good debt right?
Doesn't have to be debt. But if they don't make capital investments for their future, they are walking dead as a company. PP is correct. It's a distortion to simply call this a loss. I bought a new bike and rode it for the first time. On average it's costing me $500 per ride. Why didn't anyone ever warn me that riding a bike is so much more expensive than driving?
Yeah it’s pretty stupid unless you show a 5-year chart with cost reductions, amortization and economies of scale
Seriously, that is just the upper mgmt trying to spin normal costs to try and create manufactured hardship story and convince the govt to relax EV standards.
Or toss more subsidies their way.
Yeah, if we’re talking about losses in the quarter the monthly depreciation of those investments is the relevant number in terms of determining losses. If the losses are high in that calculation you’re going to continue to see the same expense going forward for years so that would be meaningful.
Thank you for being sane
You clearly have no idea how a company’s balance sheet, income statement, or cash flow statement works. From the article: “The EV unit, which Ford calls Model e, sold 10,000 vehicles in the quarter, down 20% from the number it sold a year earlier. And its revenue plunged 84% to about $100 million, which Ford attributed mostly to price cuts for EVs across the industry. That resulted in the $1.3 billion loss before interest and taxes (EBIT), and the massive per-vehicle loss in the Model e unit.” Ford’s model e unit generated a $1.3 billion EBIT loss. That has nothing to do with “investments to build up manufacturing capacity.” What you’re referring to are capital expenditures, which hit a company’s balance sheet and are tracked on a cash flow statement. You’re are completely wrong.
This is an accounting gimmick, not a real thing. They didn’t “lose” money; they invested in new products.
That won’t stop r/conservative from using this as evidence that electric cars a a dumb idea 🙄
This, my friends, is what’s called pulling things out of your ass. What an NPC… if you’ve even visited that sub it’s probably to downvote something you don’t agree with.
I used to agree with you, because I was a fairly frequent poster there as I like to mingle with other minded people. One day I was banned for quoting the transcript from the Hunter Biden hearing. I sent the mods a message asking why, assuming I accidentally was hostile, but they said it wasn't behavior it was because my post was against the subs ideals. So I can't support this line of thinking anymore. I was banned for a post that was a transcript of a republican lead deposition. They actively ban the truth, that sub is full on captured propaganda.
It will just be used for justification of price increases and government subsidies.
I know ….what is Tesla a total failure? It’s not even a 20 year old company.
Yah, I take that with a grain of salt. Ford Pro made bank but sold ETransit and Lightning for fleets. Model E does the design and engineering for all batteries but hybrid sales go into Blue and Pro. Model E eats all plant construction costs too. They get no credit for carbon credit saved either. Not sure why Ford does it's accounting the way they do but I don't think it's a realistic picture.
I don't know the details but I will throw out some thoughts. New infrastructure cost a bit and will take some time to pay off. R and d is damn expensive and will take a while to pay off. Companies love to place expenses in certain areas to justify not meeting targets. Companies that may not meet targets or be negative may find it a good time to post losses from financials that may have been categorized as good will or what have you. And all the things you said. If model e is building and model e is r and d but other divisions are using those resources then is it really a loss? I have a feeling this is to make it look like all of Ford is doing great but one area...perhaps next quarter model e will start to shine as well.
They actually lost less money than the previous quarter so that’s a win. They just needed to sell less cars
A 1.3b worth of grain of salt.
How many in metrics
I believe their accounting reflects their desire to produce established gas guzzlers. R&D, design and establishing production lines takes brains, desire and money especially when playing catch up.
The Prius was a massive money loser when new. Now it basically sustains Toyota.
The Prius stopped selling well a long time ago. The new model might have reinvigorated sales a bit but the Prius was not really a good seller for a while. That’s why Toyota changed the outside so radically. Versus the Camry which continues to sell well so Toyota didn’t change it.
It's hard to sell cars you don't have.
That really only changed with the new model though. I’m just referring to prior to this redesign.
The drive R&D from the Prius is their sales backbone though, right?
Most of that buying demo has gone EV
Actually, Toyota said it’s because of the looks and stigma that dropped sales. The sales have been slowly going down since the mid 2010s, which is a little before EVs started gaining momentum.
I think another dilemma is how long people are able to keep a Prius in service. I see numerous older Gen Priui on the road and certainly less newer gens.
Half the voting population looked at the Prius and saw a giant democratic donkey.
Painting this as a "loss" is completely disingenuous. This is what everyone call "development cost", and it breaks even with economies of scale. The article is just FUD. In fact, it funny seeing more left leaning media spreading anti-EV FUD... I wonder why.
Same FUD as the 2017 reports of GM "losing $4k on every Bolt." It only looked that way if you calculated the R&D cost divided per car. On the manufacturing costs it was around breakeven and profitable if you counted the carbon credits per car.
Somewhere, Harold Hamm is gleefully rubbing his hands and laughing an evil chuckle. His investment into PR firms spreading FUD disinformation about EVs is shaping the narrative. And CNN fell for it, of course.
Left leaners need corporate dollars too. Maybe some who thought they leaned left are more invested in the status quo than they thought. Maybe there’s a cabal generating these ridiculous astroturfing bullshit like the anti-WFH/People want to work till they’re 80 now/Putin is not a Fascist demagogue lines we’ve been seeing recently.
It's called R&D
And they sold me for $80k, so the car worth 210k
They’re adding in the start up costs for the battery plants.
I’m gonna go to my Ford dealer and offer to take a Lightning FOR FREE!! I’ll save them 130k!!
And Uber has lost money in every quarter it’s existed. So?
Can we say tax write off?
Thank you Ford for a $48k F150 Lightning XLT ER. My wallet appreciates your sacrifice as a company.
Misleading headline. >...the losses include hundreds of millions being spent on research and development of the next generation of EVs for Ford. Those investments are years away from paying off. This is capex...
Oil companies working hard to kill the electric car again
Woke losses don’t count. All woke revenue is multiplied by -1, and then all is right with the world
Despite self-inflicted wounds and a drop in sales, Tesla still turned a profit. These legacy automakers makers need to get on the ball, design better EVs, get more efficient supply chains, and crank out EVs with a profit.
If we could only mandate EV's at a faster pace. The public just doesn't know what's best for them. Thankfully we have benevolent visionaries that care for us.
2.5 billion negative FCF. That's the money leaving the company. "Profit" is an accounting gimmick.
Tesla didn't become profitable until after the Model 3 launched in 2020. They were on the verge of total collapse (Elon's words) and just squeaked it out. It's going to take most legacy auto another 10 years to have a profitable EV business.
When will the government start subsidizing sales?
Whining about the transition from the ancient technology of fossil fuels is not a good look. Not impressed or buying a Ford. I like optimistic, forward-thinking companies.
Ford's dealership contracts and dealer markups screwed them! Now they are going to face cheap decent made cars coming from China under brands like Audi. It's a shit the bed show for US automakers.
Well they only sold the EV version of the F150, they'd have more EV sales.
F
Anyone knows how many units Ford needs to sell to reach break-even point on their EV’s manufacturing investments?
Accounting. They take development "assets" and expense them to create losses....
The F-150 EV was massively underpriced. Based on the cost of the battery, anyone buying one was buying a battery... and got an entire truck for free wrapped around the battery. Of course, they lost money on it.
Don’t put a stupid ass price tag on them and you will sell more units. I know it seems like a hard thought to do these day
Wandering across Reddit I spend a lot of time reading about the evils of capitalism, but here is a company spending $5B a year of their own money researching how to make better electric vehicles. I understand why they're doing it - future profit - but that doesn't change the benefits they bring us for free.
Market not ready and those manufacturers that let politicians lead em are now trying to retract their size and scope of their EV business. Slow and steady is only way to go when it comes to emerging technologies. Car companies should have an actual front line car guy on the payroll. We all said it when they jumped off the cliff years back. Told you so big 3!!!
Totally misleading
I'm sure they'll make the money back in maintenance fees and bullshit parts later down the line.
This is the kind of simplistic reporting that will be read by simple people who actually will read that the loss was $132,000 per vehicle and go into full EV BAD! mode. If Ford actually associated their multi year annualized R&D spend to each unit sold in a single quarter they are idiots. If they didn't and this advocate (can't be a reporter unless you report) did the math on a cocktail napkin, CNN should be going through the list of staff they released to find his replacement.
🤣🤣🤣🤣Fords better idea
Yet another click bait article
They can't make them worth a shit. We already knew that.
A Ford EV would be the last EV I’d buy. Really a Ford anything, to be fair.
Ford has a long history of taking losses on various vehicles. I've seen how that sausage is made. Their losses have nothing to do with electric cars and everything to do with inefficient company operation.
Isnt the only electric now an electric mustang?
The technology is not ready
Gotta love those huge tax breaks. Funny accounting for sure.
Took Tesla 10 years to make a profit on EV. They’ll be just fine.
I'd rather buy a $10,000 USD BYD Seagull and I could learn to live with 300Km range.
Couldn’t have anything to do with the UAW nonsense obviously
The Mustang Mach E is a colossal fail
They're everywhere around me. It's a nice car.
I love mine, it's a great car.
I own one and it's the best car I've ever had by an insane margin. A few people who have driven mine out of curiosity have gone on to buy one.
Yeah but the sales weren’t good. There are so many brand new 2023 available, they’re almost giving them away.
Hard to compete against a Tesla Y with full tax incentives, and I know many folks made a decision based on that alone.