According to Ford Motor’s chief financial officer, the automaker is prepared for an economic downturn amid rocketing Mach-E build costs and despite steady demand for new vehicle
According to Ford CFO John Lawler, at a Deutsche Bank conference on Wednesday, rising battery material costs and inflation are countering Ford’s record profits and strong demand for electric cars. The Mach-E has been re-priced to offset inflation’s effects, but the problems persist.
According to Lawler, Ford’s profit margins were retained by increasing the vehicle’s price, but commodities’ costs continue to increase. Despite not divulging just how much Ford is losing on the Mach-E, the CFO said costs have increased by and astonishing $25,000 for the vehicle.
In the meantime, Ford has recalled nearly 49,000 Mach-Es due to a malfunction that could overheat the battery’s high-voltage contactors, causing a loss of power while driving and potentially causing an accident. According to the company, a simple update over-the-air will solve the problem, but a more extensive recall could cost millions if the update doesn’t work.
These Mach-E build costs raises the question about Ford’s ability to meet production and delivery goals for EVs in the next few years, along with other automakers trying to ramp production and catch up with Tesla. A shortage of semiconductors and parts forced Ford to shut down new Mach-E orders in April. A month prior, the automaker announced it would separate its combustion engine business from its EV unit, saying it would invest $50 billion by 2026.
Mach-E build costs aren’t the only problem Ford has at the moment. The automaker’s vehicle financing arm, Ford Credit, is receiving payments from customers later and later, indicating more signs of an incoming recession.
Lawler went on to say that Ford is prepared to follow multiple approaches in the event of a recession.“We’re very lean on inventories. We have an order bank that’s significant at over 300,000 units,” said Lawler. “As an industry and as a company, we’re heading into this [possible recession] in a much different position than we’ve ever been in before.”
Originally picked up by TechCrunch