According to Bloomberg, Ford Motor has begun to cut orders from battery suppliers to stop the loss growth of electric vehicles.
Ford will continue to work with its battery suppliers, including SK On, LG New Energy and Ningde Times, according to people familiar with the matter.
In response, a Ford spokesman said the company usually does not comment on relationships or terms with suppliers.
Ningde Times said that “cooperation with Ford is progressing normally”, but did not elaborate.
SK On and LG say the contract with Ford is still valid.
Jim Farley, CEO of Ford, recently said that Ford’s electric vehicle division Model e “is a major drag on the company at the moment.
” Ford lost more than $100000 on electric bikes in the first quarter, more than double the loss in the same period last year, as electric vehicle prices plummeted and demand slowed, according to one of the people familiar with the matter.
Bloomberg Industry Research (Bloomberg Intelligence) estimates that Ford’s losses on electric vehicles this year are expected to be close to the profits made by its Ford Blue internal combustion engine division.
The decline in orders seems to be one of the new problems troubling the auto industry.
Us carmakers are facing persistently lower-than-expected demand for electric vehicles, while battery makers in South Korea, China and elsewhere are dealing with a backlog of unsold inventory.
This, in turn, further affects the supply chain, affecting the prices of key metals such as lithium, cobalt and nickel, hampering investment decisions for new projects and, in some cases, mine closure.
It is reported that the trading prices of metals such as lithium, cobalt and nickel are all at multi-year lows this year.
Ford executives revealed that they have cut thousands of dollars in costs from electric vehicles to make their business profitable, but they have also had to slash prices to remain competitive with market leader Tesla.
John Lawler, Ford’s chief financial officer, told analysts on an earnings call on April 24th that Ford remains committed to reducing the cost of electric vehicles and expects production costs to continue to fall.
However, this will be largely offset by huge pricing pressure from industry competitors.
“but our goal is to reduce costs as much as possible on Model e this year, all in order to achieve the goal of positive profit margins.
” Lawler said in an interview this month that finding a way to make money on electric vehicles is critical to the company’s long-term survival.
Model e has to be self-reliant, he said.
“it needs to be profitable and it has to provide a return on our investment.
” Lawler was promoted to vice chairman of Ford on May 10th, focusing on long-term strategy and helping to find ways to stop electric vehicles from losing money.
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