Ford's Electric Nightmare: Marchionne's Prophecy Comes True

Yes, there’s been an electric jolt, but for Ford, it’s more like a horror film than a revolution. The legendary American carmaker bravely split its business: one side for the trusty combustion engines, and the other for electric dreams. Economically speaking, this split has been a heart attack waiting to happen. In Q2 2024, Ford's operating profit plummeted from $3.8 billion to $2.8 billion. Net profits slipped from $1.9 billion to $1.8 billion, despite a 6% revenue increase to $47.8 billion thanks to the new F-150 and Transit vans. The real horror story? Ford's Model E division, loses a staggering $40,000 per electric vehicle sold.

Marchionne Always Knew

Let’s take a moment to recall the words of the undisputed king of automotive candor, the sweater-wearing, August-vacation-hating Sergio Marchionne. Back in May 2014, during a Washington address, he said, "I hope you don’t buy the Fiat 500 electric. Every time I sell one, I lose $14,000. I'm honest enough to admit it." Marchionne insisted that producing electric cars is a financial black hole for everyone (Tesla excluded).

Ford's Financial Fiasco

Fast forward a few years, and it turns out Ford’s electric cars are a bigger money pit than the Fiat 500 electric. Ford loses $50,000 per vehicle, but hey, at least their cars are bigger, more tech-laden, and more expensive. The Fiat 500 electric remains a sad flop in terms of deliveries.

Ford's Bleeding Red

Back in the US, Ford’s Model E division recorded a $4.7 billion operating loss in 2023 (that’s $40,525 for each of the 116,000 electric cars sold). The division closed the quarter $1.14 billion in the red, with a first-half loss of $2.5 billion – that’s already half of Ford’s projected losses for the whole of 2024. Thankfully, the traditional Ford Blue combustion engines and Ford Pro commercial and fleet vehicles are keeping the ship afloat.

And there you have it: an electric jolt that’s more like an economic nightmare. Perhaps it’s time to dust off the old combustion engines and admit that not all that glitters is green.