Mach-E started as a compliance EV and the realised that their compliance car might not sell at all and they would have to lose like 10-15k on each one of them, and potentially sell them in fairly large numbers compared to compliance cars of the past.
So they have a team inside Ford and they basically told them to go all out on the vehicle and they did a nice job. These guys however are still sort of separate from overall Ford and the car is basically designed to sell well and not lose them to much money. Ford has the issue that they simply don't have battery supply to scale their EV production.
They are getting batteries from LG in Europe right now but all new capacity is basically already reserved for all the Europeans. They simply can't copy the Model Y and sell 300k a year, specially because to match the Y in specs, they needed to put more battery into it.
I agree with your point on FSD. They said they would start to value it during trade in now, but even so, when you sell it privately, if the buyer doesn't want FSD its harder to sell, its limits the pool of people who want it.
About the start of the as compliance yes, but I don't have link right now. This was said in a video interview, maybe with Autoline? Not sure. But it was some of the top guys on that program.
The detailed economics is conjecture, based on different statements and some assumptions. Sorry, I didn't want to come across as this being certain knowledge. Maybe the lose on the Mach-E are still pretty bigger. Maybe they changed from the compliance because they wanted to have a flag ship for marketing.
This is just how I interpreted it, they wanted to sell a 'compliance car' that they could actually sell for a premium price and have premium options on.
Ah sorry, I mean specifically the economics discussed - loss per car for a compliance car, the need to produce more compliance cars, that the car is expected to lose money still.
I'd be quite interested in a peek behind the curtains with that much detail, but I don't think that much has been said publicly and I wonder if it's just the parent making inferences.
GM lost money on every Volt and loses money on every Bolt. Tesla is rumored to sell at a lost and make up for it by selling clean energy credits to the likes of Fiat Chrysler.
It's well known that all of Ford and GM's past EVs were compliance cars.
The details are important, though. The industry factors R&D in to gross margin, and typically reports of per unit losses include it.
If you spend $1bn to develop a car you sell 100k of break even, you just lost $10k per car. But that doesn't mean you're going to lose twice as much if you double the production.
If they were going to lose 10-15k per incremental unit, that's horrific and I'd love to know the details, that's why I'm asking.
I honestly don't know how to reconcile R&D costs but I dislike how they're applied per unit today. R&D is a sunk cost and the technology gained from it can be applied beyond the original scope. I get it because bean counters want to point fingers when it comes to penny pinching.
It's not as if GM goes back and adjusts the R&D % applied to the 97 Corvette when they sell an LS engine. The R&D cost of every subsequent vehicle that reuses something off the shelf is going to be cheaper.
I'm not defending the way they amortize, but if you don't take it in to account, it can lead to some poor conclusions.
Tesla R&D is so ridiculously efficient. I wouldn't be surprised if a Model 3 from scratch costs traditional auto companies an order of magnitude more to develop.
So the first EV models inevitably come out, amortizing a large amount of R&D over a limited run, and it looks like an absolute disaster for margins.
It doesn't necessarily mean things aren't going well - although it certainly can!
So they have a team inside Ford and they basically told them to go all out on the vehicle and they did a nice job. These guys however are still sort of separate from overall Ford and the car is basically designed to sell well and not lose them to much money. Ford has the issue that they simply don't have battery supply to scale their EV production.
They are getting batteries from LG in Europe right now but all new capacity is basically already reserved for all the Europeans. They simply can't copy the Model Y and sell 300k a year, specially because to match the Y in specs, they needed to put more battery into it.
I agree with your point on FSD. They said they would start to value it during trade in now, but even so, when you sell it privately, if the buyer doesn't want FSD its harder to sell, its limits the pool of people who want it.