Ford delivers very bad news for electric car buyers

Ford delivers very bad news for electric car buyers

It’s a real hit.

stronghold (F) It has hit consumers and buyers of electric cars in particular with some seriousness.

The blow is so strong that it will take several minutes for consumers to recover.

Last month, the automaker warned that it was unable to deliver the 40,000 to 45,000 vehicles it promised to its dealerships during the third quarter due to a shortage of spare parts.

Ford p added that suppliers have also raised their prices, which would have affected its profits.

“Based on recent negotiations, supplier costs associated with inflation during the third quarter will be about $1 billion higher than originally expected,” the old automaker said.

In the short term, that will hurt earnings for the company, which now expects adjusted third-quarter earnings before interest and taxes in the range of $1.4 billion to $1.7 billion. That’s significantly less than the $3.7 billion in adjusted EBIT Ford reported in the second quarter.

But it was also a signal that the car manufacturer would decide to pass on this additional and unexpected cost increase to consumers in the form of higher car prices. This is what just happened.

Additional price increases

Ford has decided to increase prices for the F-150 Lightning, the electric version of its best-selling F-150 pickup truck.

The base price of the F-150 Lightning will increase by $5,000 for the 2023 model year. So consumers must pay roughly $52,000 to $97,000 depending on the version. For 2022 model cars, base prices ranged from $40,000 to $92,000. Obviously, these prices do not include taxes, delivery and other charges.

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The base price of the F-150 Lightning Pro, the model intended for professional customers – corporate and government – will increase by nearly 11% to $51,974. The increase is even more exciting if we refer to the first cars in May 2021. That cost is $39.974.

Price increases do not affect customers who have already placed their orders.

This is the second time in just over a month that Ford has raised prices for the F-150 Lightning. On August 9, the manufacturer raised truck/pickup prices by between $6,000 and $8,500 depending on the model.

Thus, the base price of the 2023 F-150 Lightning has gone up between $47,000 and $97,000, compared to about $40,000 to $92,000 for the 2022 model. These prices clearly do not include taxes, delivery, and other fees.

As in August, Ford attributed the price hike to costs associated with continued disruptions affecting the supply chain

Supply chain disruptions have been exacerbated by the COVID-19 pandemic and the shortage of microchips. Together, these two problems forced automakers to suspend production of some models, which are often very popular. They also reduced the stock of new vehicles.

higher costs

At the beginning of the year, the easing of the epidemic in several regions of the world gave hope that things would eventually return to normal, but that was without counting on the invasion of Ukraine by Russia. This unjustified war caused the prices of raw materials needed to assemble certain vehicles, such as electric cars, to rise.

The cost of developing batteries has more than doubled since the coronavirus pandemic, research firm AlixPartners has calculated. This increase in costs is due to the disruptions caused by the pandemic to supply chains and the rising prices of raw materials in the wake of Russia’s invasion of Ukraine.

Costs for the raw materials (cobalt, nickel, and lithium) needed to develop an electric vehicle have increased on average by 144% in two years to $8,255 as of last May, according to a report published in June by AlixPartners. As of March 2020, these costs are $3,381. The research company added that the cost of developing an electric vehicle has increased by about $2,000 over the past two years.

Great impact on consumers

All this is very bad news for consumers.

A growing percentage of Americans are committing to making monthly payments for new cars in excess of $1,000 as interest rates and prices continue to rise, according to The 14.3% of consumers who financed a new car purchase in the third quarter of 2022 committed a monthly payment of $1,000 or more, the highest level ever recorded by Edmunds.

The study found that more than 1 in 4 consumers who financed an electric car committed to a monthly payment of more than $1,000.

Jessica Caldwell, executive director of Edmunds Statistics, said: “Despite troubling macroeconomic conditions, Americans are spending more money than ever on new cars. An ongoing inventory shortage is partly to blame, but this trend is also a reflection of consumer preferences.” “

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