Raw material costs are sapping the profitability of Ford Motor Company’s Mustang Mach-E electric SUV and other EV’s

Chief Financial Officer John Lawler said, “We actually had a positive bottom line profit when we launched the Mach-E, commodity costs have wiped that out. You’re going to see pressure on the bottom line when we launch our EVs, they’re not going to be positive.”

Despite that, Lawler said Ford sees a lot of ways to reduce costs in building the vehicles and the company is re-engineering the vehicles on the fly to improve margins.

Ford will also be boosting prices of the Mach-E, even as it is being recalled for safety defects that could render it immobile. Although there are no specifics on price hikes, the vehicle already costs $25,000 more than an equivalent combustion-engine Edge SUV.

Lawler said, “We are working back to contribution-margin positive across all of our EVs.”

As Ford is spending $50 billion on plans to produce 2 million EVs annually by 2026, and is launching their new F-150 Lightning EV pickup, Lawler notes it is all being underwritten by the company’s internal combustion models like the Bronco SUV. Lawler notes profitability is their goal and they are working toward that, “as we’re scaling and we’re launching these vehicles.”

Lawler also acknowledged that auto-loan delinquencies are on the rise as inflation picks up and interest rates rise. He noted they had been very low last year, and are now returning to pre-pandemic levels.

Lawler said, “We’re looking for every indication and every data point we can to get a read on where the consumer is, where they’re headed, given everything we see out there, the inflationary pressures, the economic issues. We are seeing some headwinds there a little bit when it comes to delinquencies as maybe a leading indicator.”