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Ford and Volkswagen face COLOSSAL LOSSES with electric cars; useful life of combustion engines can be extended

Written by Valdemar Medeiros
Published 10/07/2024 às 10:20
Ford and Volkswagen face COLOSSAL LOSSES with electric cars; useful life of combustion engines can be extended
Photo: Dall-e

Ford and Volkswagen suffer huge losses with electric vehicles; Expanding the useful life of combustion engines could be the solution.

Volkswagen is struggling with the high production costs of electric cars and problems in supply chain. Meanwhile, Ford is reviewing its strategy with smaller battery orders and focusing on more affordable models. You will ask yourself: are these difficulties real or exaggerated expectations from the global market? Fasten your seatbelt and come with us!

Nowadays, two very large automakers have suffered for choosing such a large expansion of electrification, and both Volkswagen as for Ford are dealing with the consequences.

Volkswagen and the transition to electric vehicles

Volkswagen, one of the world's largest automakers, is facing significant challenges in its transition to electric vehicles. Despite the growing global interest in mobility sustainable and the company's commitment to reducing its carbon emissions, Volkswagen has registered losses in its electric car segment.

These challenges are the result of a complex combination of high production costs, heavy investments in development and infrastructure, intense competition, demand variability and supply chain issues.

Understanding the reasons behind this loss is crucial to evaluating Volkswagen's future in the electric vehicle market and the strategies necessary for it to overcome these obstacles.

Main factors behind Volkswagen's losses

High production costs

The production of electric vehicles, especially Batteries, it is still very expensive. Manufacturing lithium-ion batteries represents a significant portion of the costs, and the technology required to produce these vehicles is advanced and expensive.

Volkswagen, like many other automakers, is investing heavily in developing electric vehicle technologies, building battery factories and also expanding charging infrastructure. These initial investments are substantial and do not yet fully pay for themselves.

Intense competition

The electric car market is becoming increasingly competitive, with many new and old players investing in this technology. Companies like Tesla, which already have a strong presence and an established business model, or even a BYD which is coming with everything recently, represent a very large and significant competition.

Insufficient government incentives

Although there are government incentives for purchasing electric cars, in many cases they are not enough to fully offset the higher costs of these vehicles compared to traditional internal combustion models.

Demand variability

Acceptance and demand for electric vehicles still varies greatly between different markets. In some locations, the adoption of electric vehicles is slower than expected, affecting sales and, consequently, profits.

Supply chain issues

The global supply chain is still adjusting to the growing demand for electric vehicles. Problems in the supply chain, such as shortages of components and raw materials, can increase costs and delay the production of such cars.

Ford's challenges with electric vehicles

The other automaker that has had huge losses because of electric cars is the American Ford. The brand has faced a harsh reality that previously did not seem possible.

According to Bloomberg sources, Ford is reducing its battery orders from suppliers in response to growing losses on its electric vehicles. This move comes amid a slowdown in demand for electric cars and a significant drop in battery prices.

Ford financial losses

The North American automaker is facing a major financial shortfall due to the large investment made in electric vehicles.

Ford lost more than 100 thousand dollars, the equivalent of 545 thousand reais today per electric vehicle sold in the first quarter, totaling more than double the previous year's losses.

This entire gigantic impasse led Ford to a major retreat in its electric vehicle strategy, mainly in the United States, which was the market where the brand invested the most in recent years.

Ford's change of strategy

All of this caused the automaker to change its strategy and even reduce its plans for upcoming electric cars globally. Ford had plans to present several models in the 100% electric intermediate segment, however, now the automaker is focusing on cheaper vehicles, with prices around 25 thousand dollars to be more accessible, competitive and profitable.

One thing is certain, the problems that have plagued Ford are not exclusive to the American brand alone. Demand for electric vehicles has not been as great as anticipated, leaving several automakers with a backlog of batteries ordered but not delivered to manufacturers. All of this has also made the metals essential for battery production much more expensive.

Will Ford and Volkswagen give up on electric cars?

No! Investments in the electric car market by both automakers will continue. A large part of the public still has doubts about the efficiency, cost-benefit and viability of eletric cars. By educating people better, you can generate more trust and accelerate the acceptance of these vehicles.

It is worth highlighting the importance of strategic partnerships. Volkswagen may consider joining forces with other technology companies to develop innovative solutions and share costs and risks. Imagine enjoying a car that is not only sustainable, but also highly technological and user-friendly.

Finally, the continuous innovation is the key. Staying ahead in the market requires a commitment to research and development. New battery materials, production techniques and even ways of recycling can make a monumental difference. When you think about the future of mobility, the constant technological evolution It could be the missing piece to ensure sustainable success.

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Valdemar Medeiros

Journalist in training, specialist in creating content with a focus on SEO actions. Writes about the Automotive Industry, Renewable Energy and Science and Technology

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