Illustration: Aïda Amer/Axios
Gas-powered cars, trucks and SUVs are still paying the bills for automakers as they pile money into electric vehicles.
Why it matters: EVs are the future, but getting to that future will be expensive.
Driving the news: Ford revealed Thursday that it expects to lose $3 billion in its electric vehicle division in 2023, despite early sales success for the F-150 Lightning and Mustang Mach-E EVs.
- But Ford expects to turn an overall profit before interest, taxes and depreciation of $9 billion to $11 billion for the year.
- The company is one of the only automakers that separates its EV operations from the rest of its business for financial reporting purposes.
State of play: “It’s a big number, but I suspect if you took the other automakers and pulled out the EV business you’d find it to be similar,” Autotrader analyst Michelle Krebs tells Axios.
- EVs currently account for only about 6% of sales, though they are growing quickly, she said.
- “We believe no U.S. automaker is making EVs profitably aside from Tesla,” CFRA Research analyst Garrett Nelson writes, adding that “EVs are likely to be a material drag on near- and intermediate-term earnings.”
Automakers are using the proceeds from profit beasts like the F-150, the Ram 1500, the Chevrolet Silverado and the Toyota RAV-4 to pay for the costs of the transition.
- “They’re plowing in lots of R&D — they’re spending big on new battery plants, new assembly plants,” Krebs says.
The intrigue: Gas-powered vehicles are disappearing despite their money-making ways.
- The latest casualty of the race to EVs is the Chevrolet Camaro, which General Motors is discontinuing in its current form, Automotive News reported.
- Several automakers have committed to a goal of selling all or mostly EVs within a matter of years.
Yes, but: Automakers have little choice with investors and regulators demanding the switch.
- California is leading the way by phasing out the sale of gas-powered vehicles by 2035, while several other states are expected to follow suit.
The bottom line: Gas-powered vehicles are paying for their own funeral.
(Disclosure: Autotrader is owned by Cox Enterprises, which owns Axios.)
