This analysis is by Bloomberg Intelligence Senior Industry Analyst Kevin P. Tynan and Bloomberg Intelligence Senior Associate Analyst Andreas Krohn. It appeared first on the Bloomberg Terminal.
Lucid and Rivian lose more than $200,000 on every EV they sell, while Tesla’s bloated supply suggests its price cuts are a demand problem, not a grab for market share. Ford’s F-150 Lightning and EVs from Hyundai and Volkswagen sell for record prices, and truck- and SUV-heavy lineups give them the diversity to ride out the pause in EV demand amid high interest rates and a slowing economy.
Lucid, Rivian can’t cover COGS or deliver all they build
Lucid and Rivian are burning cash and need to achieve production scale to generate fixed-cost coverage — a daunting task at a time when demand is weak and every unit sold loses money at the gross profit line. In 2022, Lucid’s 4,369 deliveries averaged $139,000 per unit in revenue, while cost of goods sold (COGS) was $376,000 for each. Rivian’s situation is similar, with a $235,000 per unit shortfall reported at the gross profit line. The two companies’ production also outpaced deliveries — an ominous sign that demand has paused early in the production ramp-up.
In 2022, Lucid produced 7,180 vehicles and delivered 4,369 or 61% of the output. Rivian, which delivered vans to Amazon.com, built a total of 24,337 vehicles and put 20,332 in customer hands, an 83.5% conversion of production to deliveries.
Tesla price cuts don’t shrink swollen inventory
Bloating inventory led Tesla to cut prices in 1Q, though the action was ineffective as the company’s supply glut rose above 92,000 units — 24% above the year-end total and 559% higher year over year. Production outpaced deliveries for the fourth consecutive quarter, by 17,933 vehicles, even after lowering prices twice and sacrificing margin. The price war that Tesla is credited with starting never materialized. Ford was the only automaker to announce a price cut and on only one nameplate — the Mustang Mach-E. Transaction prices for Ford F-150 Lightning were a record high above $84,000 in 1Q; battery-only vehicles (BEVs) from Hyundai and VW also sold at record prices.
Total BEV unit sales at Ford rose 41% in 1Q on increased volume of Lightning and E-Transit vans. Mustang Mach-E deliveries fell 20%.
Ford slams brakes on Mach-E after price cut
Ford was the only automaker to react to Tesla’s sudden and dramatic price cuts. Though Tesla lowered the sticker on all models, Ford took down the MSRP of only one EV nameplate — F-150 Lightning was untouched — as transaction prices of internal combustion vehicles continue to rise to record highs. Ford said it would reach annualized EV production of 50,000 units a week — from 12,000 at the end of 2022 — by year-end. Ford has shunned additional price actions after Tesla lowered them a second time (and may be on the verge of a third given disappointing 1Q deliveries) and instead reduced Mach-E output to align supply with demand.
In January, Ford didn’t produce a single Mach-E and made only 360 in February. In the same period in 2022, Ford had already built 10,799 of the electric SUV.
Bloomberg
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