Ford is pressing its suppliers for cost reductions to improve profitability of its electric vehicle division, Model e, which reported a $1.3 billion loss in the first quarter of 2024.
In a memo from Ford to its EV suppliers, first reported by Crain's Detroit Business, Liz Door, Ford's chief supply chain officer, said the automaker needs to "deliver affordable EV products to our customers."
Door asked suppliers to look for ways to make manufacturing operations more efficient and reduce capital spending. She also called for further cost-reduction proposals on the EVs in Ford's lineup, including the F-150 Lightning, Transit and Mustang Mach-E.
Ford told Reuters it is working on making its EV division profitable. "We value our suppliers’ collaboration and asked them to share their ideas for cost reductions," the company said in a statement.
Ford's Model e division, which focuses on EVs and related software, is hemorrhaging billions in an intense competition with Tesla and other industry leaders, who are dropping prices on their own EVs. The division's first-quarter loss translates to more than $100,000 for every EV Ford sold.
In response, Ford CEO Jim Farley announced a cutback in projected spending on building out the Model e unit, scaling down from an anticipated $10 billion to between $8 billion and $9 billion.
The push for cost efficiency is part of a broader strategy that includes reevaluating Ford's focus in the European market. Martin Sander, head of Ford's European passenger car division, hinted at a potential pivot towards hybrid-electric vehicles in response to consumer preferences.
"If we see strong demand, for instance, for plug-in hybrid vehicles, we will offer them," Sander noted.
