Elon Musk thinks Ford’s EV strategy is ‘smart’

Elon Musk had encouraging words for Ford as the automaker continues to report major losses from its electric vehicles.

Tesla is at the forefront of the automotive industry’s transition to electric vehicles in many ways. One of them is margins.

While virtually all mainstream automakers have started switching to electric vehicles, most of them are struggling to make money selling them.

Most of them sell electric vehicles at a loss or with a slight positive margin and compensate with their gasoline vehicle business until they can improve those margins.

Meanwhile, Tesla sells its vehicles with a gross margin of 15-25% and a net operating margin of around 10%.

For the first time since separating its electric vehicle (e-model) business unit, Ford detailed the finances of its electric vehicle programs and confirmed that its EV business is currently generating negative margins of 40%.

A Twitter user tweeted this fact to Tesla CEO Elon Musk, who actually had words of encouragement for Ford:

“Always difficult with margins for new vehicle lines, especially when there are major technological changes. I think Ford’s overall strategy with electric vehicles is smart. The electric F-150 (Lightning) has a strong demand.

Musk has often shown respect for Ford – pointing to the fact that along with Tesla, it’s the only other US automaker that has never gone bankrupt.

Now he goes so far as to call Ford’s EV strategy “smart.”

Electrek’s Grasp

I like the Mach-E and the Lightning, so I tend to agree with Musk here, but the main issue is that we’re still not seeing the volumes of electric vehicles from Ford that we need to see.

In fact, Ford’s electric vehicle sales were down this quarter.

But the automaker still thinks it can boost its annual electric vehicle production capacity to 600,000 units by the end of the year.

Now it’s starting to be a decent volume. If he can achieve that, he should start getting closer to breaking even on his EV activity.

But I think the most exciting things from Ford on the EV front will come with the next-generation electric pickup truck. I think this will be a “make or break” moment for Ford in the EV transition.