Ford's recently unveiled Mustang Mach E will begin making profits "on the number one vehicle," Ford CEO Jim Hackett said in an interview with Bloomberg following Ford's Sunday Mach E revealing event.
Hackett specified that the car's production costs will be lower than the sales revenue from the very beginning. The vehicle line will still have to cover the original costs of R&D before it becomes "profitable" for the company, but this is the case for any vehicle line.
Hackett mentioned that this should surprise many people because "electricians have not had a history of making money." We have heard this from other manufacturers before. Many people apologize for dragging their feet on electric cars because "nobody makes them profitable. "
But in fact, Tesla even made a profit on the original Roadster. Since Tesla has grown rapidly since then, the positive margins they make on their cars, along with as much money as they could raise, have declined to grow the company that is currently running quite profitable.
Even other vehicles that produce a "loss" per company for the company are often worthy of projects for various reasons, if they were not, the companies probably would not sell them. [1
Two, these programs ne helps companies position themselves strategically for the inevitable electric future. Long-term planning is important.
So all this talk about profits is a little redundant, but it's good to see Ford dispelling the myth that EVs can't be made profitable. The fact that the company has taken this car from concept to production in less than three years and is going to be able to make it profitable is extremely impressive.
Hackett was also asked why Mach E should be built in Mexico. This is interesting, as we recently reported on the Ford Union agreement which stated that "Mustang derivatives" will be built in Flat Rock, Michigan. We assumed at the time that this included Mach E, but apparently Ford will take some time to scale up their electrification work in US facilities.
They will need to move quickly, since Hackett stated in the interview that Ford plans to be carbon neutral by 2030. The company has big plans to start selling more electric cars in China and Europe in addition to the United States.
When manufacturers claim that no one makes electric cars profitable, Tesla often rebates by saying that they do some sort of voodoo math (also known as "growing the company at a rate of 50 % + per year, which tends to be costly ").
But talking about voodoo math – producers and the media often come up with their own voodoo math to convince themselves that EVs don't make a profit. Just a few months after the original Volt came out, a headline stated that Chevy lost $ 40,000 per vehicle, which was an absurd amount.
Of course, the claim itself was absurd, because it shared the cost of all vehicle R&D over just the first thousand units. Every vehicle (and in fact, basically every "widget" of any type) ever created has had a certain amount of R&D costs baked in, which must be paid off before you start making money. Only after you have sold the item for a while will you be able to make some profit.
Fiat's former CEO Sergio Marchionne made similar claims about the Fiat 500e, which he said lost $ 14,000 dollars per car sold. If this really was the case, why did he continue to sell them? Maybe because his company would have been less profitable if he hadn't sold them, since he would have been punished (even more) for running the least efficient carmaker in the US – meaning the 500e didn't actually lose his company money after all, in a holistic sense.
By the way, Marchionne also said that Fiat could have a Model 3 competitor on the road within 12 months if the car proved to be profitable. Marchionne is no longer holding back the company's EV efforts, but unfortunately we still haven't seen that car despite Tesla proving that the Model 3 can be profitable, that's right, just over 12 months ago.
I would like to offer another reason, but why Ford manages to make this car profitable: because they actually try .
When other manufacturers state that they cannot make cars profitable, it is usually because they dump a bunch of money in an incompetent frankenstein of a car. They wedge expensive, low volume components into already built vehicles, with all the design and packaging compromises that come with it.
So, surprise the cars are not very attractive to consumers, and the company does not bother to try to sell them anyway. They wonder why no one wants the car they hardly intended to do, and then pour some token money into green-washing campaigns only in one state (California), which happens to be one of the more expensive media markets to do so.
And the cost of all R&D and marketing are split between the few thousand cars they barely scratch by selling because they are actually not trying very hard to sell the car in the first place. No wonder they don't "make money" on the cars, they seem to be actively sabotaging the ability to do so.
It's not just about electric cars, it's about some change in the auto industry whatsoever. They are so passionate about the development of the automotive industry that they will consider their own efforts by lobbying for a change, then lobbying for the change they lobbied for and then deciding for a third time. Fortunately, Ford, BMW, Honda and VW were finally discovered and embraced the obvious change to come.
Toyota is a relevant example in this area. They claim to develop many EVs, but run science-illiterate anti-EV ads. Then they lobby for fuel economy standards as opposed to their false "green" image. They do their best to make their own job more difficult, just because they are stubborn and do not want any change in the automotive industry.
So many of the major car manufacturers will just continue to make the same cars, with a 1% improvement in some meaningless calculation every model year, and are actually not forced to step off the impossibly narrow path they have built for through decades of complacency.
And that's the problem with the whole automotive industry in a nutshell – except for the apparent Ford. By actually putting some effort into making a good car, with a good brand attached, and thinking ahead about marketing and production and sales and customer support, they have managed to come up with a car that they can be sure will work well for them, and that consumers are responding well, and will even make them some money.
A lot remains to be seen, there is still a lot of ground between now and the end of 2020 when this car hits the road. But it looks like Ford has chosen another good idea to steal from Tesla: the idea of trying to make a good car . Who would have thought.
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