Amid a shifting strategy, Ford (F) reported first-quarter earnings Wednesday, beating analyst expectations. However, due to fierce pricing pressure, Ford’s EV revenue fell 84% in Q1 2024.

Ford shifts EV strategy amid sales upswing

Despite EV sales surging 86% to 20,233 in the first three months of 2024, Ford is pulling back. All Ford electric models saw double (or triple) digit sales growth.

The F-150 Lightning remained the top-selling electric pickup in the US, with 7,743 models sold, up 80% over last year. Ford’s Mustang Mach-E was the second best-selling electric SUV in the US, with 9,589 vehicles delivered, up 77% over Q1 2023.

Meanwhile, Ford’s commercial Pro unit continues to appear as a dark horse for the automaker, with EV adoption rising 40%. Ford E-Transit sales were up 148% in Q1, with 2,891 units sold.

Ford’s growth propelled it to second in the US EV market (if you don’t include combined Hyundai and Kia sales).

The sales surge comes after Ford introduced significant price cuts and savings on the Mach-E and Lightning earlier this year.

Despite rising EV sales, Ford announced it is pushing back EV production at its BlueOval City facility to 2026. It is also delaying the launch of its three-row electric SUV to focus on smaller, more affordable EVs.

In the meantime, Ford said it would introduce more hybrids to the mix as it develops its next-gen electric models.

Ford’s Model e EV unit had a net loss of around $4.7 billion last year with “extremely competitive pricing” and new investments. Meanwhile, EBIT loss slipped to $1.6 billion in Q4.

Analysts expect Ford to report $40.10 billion in revenue in its Q1 2024 earnings report. Ford’s Model e, EV unit, is expected to generate around $24.5 billion in revenue with an EBIT loss of $1.65.

Ford Q1 2024 earnings results

Ford reported first-quarter 2024 revenue rose 3% to $42.8 billion, topping estimates of around $40.10 billion. Ford also topped adjusted EPS estimates with $0.49 per share in Q1 vs $0.42 expected.

The automaker posted net income of $1.3 billion, down from $1.8 billion last year. Adjusted EBIT fell 18% to $2.8 billion due to lower prices and the timing of the F-150 launch.

Ford Blue, the company’s ICE business, saw revenue fall 13%, again due to the new F-150 launch.

Ford Pro was the growth driver, with volume and revenue up 21% and 36%, respectively. The commercial and software business had an EBIT margin of nearly 17%, with first-quarter revenue of $18 billion.

Meanwhile, Ford Model e revenue slipped 84% due to “industry-wide” pricing pressure. With lower prices, the unit’s EBIT loss increased YOY to $1.3 billion. However, this is still down from the $1.6 billion EBIT loss in Q4 2023.

Ford expects EV costs to improve going forward, but it will be offset by top-line pressure.

The automaker is maintaining full-year EBIT guidance, expecting to hit the higher end of the $10 billion to $12 billion range. The company now expects to generate between $6.5 billion and $7.5 billion in adjusted free cash flow, up from the previous $6 billion to $7 billion.

According to Ford, the updates reflect recent cost-cutting actions, like the delayed EV investments. Ford’s update comes after rival GM also raised full-year guidance this week.

Meanwhile, Ford is releasing a new brand campaign called “Freedom of Choice” to promote its gas, hybrid, and EV lineup amid the strategy shift.

Tesla now says that it expects its own 4680 battery cells to become cheaper than those coming from suppliers by the end of the year.

4680 is a new cell format enabled by new technologies, like tabless cells, developed by Tesla.

It was first unveiled in 2020 with promises of enabling significantly lower cost, more range, and gaster charging.

It was a big bet for Tesla, which had never produced cells before. The automaker was going against giant companies like LG, Panasonic, and CATL, who also happened to be Tesla’s current suppliers.

Tesla stayed on good terms with those because it continues to buy an incredible number of cells from them and plans to continue doing so.

There have been several reports about Tesla having issues with the 4680 program, both with ramping up production and with the cost and performance of the cells.

Now, with the release of its Q1 2024 financial results yesterday, Tesla gave an update on the state of the program.

Lars Moravy, Tesla’s Vice President of Vehicle Engineering, commented:

4680 production increased about 18%, 20% over from Q4 – reaching greater than needed for Cybertruck, which is about 7-gigawatt hours per year as we posted on X. We expect to stay ahead of the Cybertruck ramp with the cell production throughout Q2 as we ramp the third and fourth lines in Phase 1, while maintaining multiple weeks of cell inventory to make sure we’re ahead of the ramp. Because we’re ramping, COGS continues to drop rapidly week over week, driven by yield improvements throughout the lines and production volume increases.

That sounds promising, but without actual data about cost, it doesn’t mean much.

However, Moravy added an interesting comment about the fact that Tesla believes its cells will beat nickel-based cells from suppliers based on cost by the end of the year:

So, our goal, and we expect to do this, is to beat supplier cost of nickel-based cells by the end of the year.

The reference to “nickel-based cells” is due to exclude lithium-phosphate (LFP) cells, which Tesla doesn’t produce but uses in most of its vehicles. Nickel-based cells have higher energy-density and are used in electric vehicles with longer range.

Tesla’s 4680 cells are currently exclusively used in the Cybertruck.

Electrek’s Take

If true, it is impressive. I know that the general consensus amongst analysts is that the 4680 program is not going very well, but if Tesla went from not being a cell manufacturer to being a high-volume cell manufacturer with a cheaper cost than the competition within 5 years, it is impressive.

Also, Elon pretty much confirmed that the 4680 program was born out of a concern that with other automakers ramping up their battery cell orders, it would put a lot of pressure on prices at its suppliers.

But with several major automakers naively slowing down their EV efforts, that has removed some of that pressure – making the 4680 program less critical. That sounds about right to me.

Rivian wants to shake up the industry with its next-generation R2 electric vehicle. Starting at around $45,000, the R2 is expected to open up a new market of buyers. How does Rivian plan to keep its rugged luxury feel at a lower price? The company’s design boss explains.

Rivian R2 design challenges present unique opportunity

In less than 24 hours after revealing the smaller, more affordable R2, Rivian’s CEO RJ Scaringe said the new electric SUV earned over 68,000 reservations.

Rivian unveiled the R2 last month, with starting prices around $45,000. That’s almost half the current $74,900 R1S and $69,900 R1T starting price.

At 4,715 mm long, 1,700 mm tall, with a wheelbase of 2,935, the R2 is undoubtedly smaller than the current R1S ( 5,100 mm x L, 1,873 mm x H, 3,075 x wheelbase). Despite its smaller size and lower price, Rivian insists the R2 will keep the brand’s essence.

According to Rivian’s design chief, Jeff Hammoud, the R2’s lower price point was one of the biggest challenges.

With R1, Rivian was able to include the cool features and design because “we weren’t that restricted on price point,” Hammoud said. At least, not as much as with R2.

Speaking with Design Milk, the company’s design boss said Rivian wants R2 to reach many more customers. But how do you do that without the car feeling cheap or diluted?

Keeping the brand essence of the Rivian brand

Rivian made a “conscious decision to make it feel like a smaller R1S,” according to Hammoud. To keep the brand essence, Hammoud said the company picked the key design elements to ensure R2 is recognizable.

One of the features Hammoud is most excited about is the R2’s new steering wheel design. With advanced roller wheels on both sides of the wheel, you can rotate them up or down, push them in and out, or move them side to side (like Tesla).

The controls differ significantly depending on the mode you are in. For example, it will have a slight click when you rotate it for volume. In the menu, you can feel bigger “chunks” of information.

Hammoud says the new design lets drivers feel what’s happening without taking their eyes off the wheel.

Not only does the R2 have its own unique design, but it also includes an abundance of fun accessories like a revamped camp kitchen, tent, and bike rack to upgrade any adventure.

Meanwhile, with the R3, an even smaller and cheaper EV, Rivian “showed how we can stretch the brand in a very different direction.” The R3 will feature a high-performance R3X variant reminiscent of an iconic rally car.

Rivian plans to start R2 production in the first half of 2026 at its Normal, IL plant. New upgrades will enable Rivian to build up to 215,000 vehicles annually, up from 150,000 previously, while slashing costs.