Ford Motor Company lost more than $5 billion on electric vehicles last year, a figure that exposes a hard truth about building affordable EVs: the laws of physics set a floor on how light and cheap a battery pack can get, and that floor rises sharply with vehicle size. The company’s broader business remains profitable, but its EV unit is hemorrhaging cash at a pace that raises serious questions about whether any legacy automaker can close the cost gap with leaner competitors. Ford’s response combines chemistry changes, domestic manufacturing, and a bet that lithium iron phosphate cells can do what nickel-based batteries have not: make electrification pencil out for the mass market.
Underneath the financial headlines is a more structural dilemma. Ford built its brand and its balance sheet around pickups, SUVs, and commercial vehicles, segments that are inherently difficult to electrify cheaply because they demand large, durable battery packs. The company can tweak trim levels, software features, and dealer incentives, but it cannot change the energy density of lithium-ion cells overnight. That reality is forcing Ford to rethink not just how it sources batteries, but what kinds of vehicles it should prioritize as it tries to turn its EV operation from a money pit into a viable business.
Five Billion Reasons the Math Still Hurts
Ford’s EV division, called Model e, posted a full-year 2024 EBIT loss of $5,076 million, deepening the negative margin the segment has carried since its creation. That loss exists inside a company that reported $10.2 billion in adjusted EBIT for the same fiscal year, according to its SEC-filed earnings release. In other words, Ford’s trucks, commercial vans, and internal-combustion vehicles generated strong profits, and the EV arm consumed roughly half of that surplus. The imbalance illustrates a tension that no press release can smooth over. Selling electric vehicles at prices American buyers will accept currently destroys value for the company.
The loss is not simply a matter of low sales volume or early-stage startup costs. Pricing pressure from competitors, combined with the raw expense of battery materials, has kept Model e deep in the red. Ford’s 10-K filing attributes the drag to a mix of factors including battery-related raw material costs and the need to price vehicles competitively against both Chinese imports and domestic rivals like Tesla. Incentives and price cuts meant to keep showroom traffic flowing erode margins further. Until the cost of storing a kilowatt-hour of energy drops meaningfully below current levels, or until Ford can sell enough units to spread fixed costs thinner, the division will keep pulling the parent company’s overall margins downward and constraining how aggressively it can expand its EV lineup.
Why Bigger Vehicles Face Steeper Physics
Battery pack costs do not scale in a straight line. Research from Argonne National Laboratory, published through its BatPaC modeling framework, shows that pack size in kilowatt-hours, choice of active materials, production volume, fast-charge capability, and labor all feed into the final price tag. Larger vehicles need larger packs to deliver acceptable range, and those bigger packs add weight, which in turn demands still more energy to move the vehicle, creating a compounding cost loop. For a compact car, the math is challenging. For a full-size pickup like the F-150 Lightning, it borders on punishing because the pack must also tolerate heavy towing and payload demands without catastrophic range loss.
This is the “raw physics” problem at the heart of Ford’s EV strategy. A pickup truck weighs significantly more than a sedan, needs a battery pack with far more capacity to cover the same distance, and must support towing loads that drain energy even faster. Argonne’s modeling captures these sensitivities in detail: fast-charge requirements add thermal management hardware, larger cells require more inactive structural material, and labor hours climb with pack complexity. None of these variables respond to marketing or software updates. They are governed by electrochemistry and Newtonian mechanics, and they explain why affordable electric trucks remain elusive even as smaller EVs inch toward price parity with gasoline cars in markets where buyers are willing to accept modest range and performance.
Battery Costs Have Plunged, but Not Enough
The broader trajectory of battery prices offers genuine encouragement. The U.S. Department of Energy estimates that electric vehicle battery pack costs for a light-duty vehicle in 2023 are about 90% lower than in 2008, a decline driven by manufacturing scale, improved cell chemistry, and federally funded research through agencies like ARPA-E programs and the national laboratory system. The DOE’s 2023 benchmark places pack costs at around $139 per kilowatt-hour on a usable-energy basis. That figure represents extraordinary progress from the roughly $1,400 per kilowatt-hour packs cost fifteen years ago and validates the premise that learning curves and policy support can dramatically reshape an industry.
Yet $139 per kilowatt-hour still translates into a battery bill of tens of thousands of dollars for a vehicle that needs 100 or more kilowatt-hours of usable capacity. For Ford’s truck-heavy lineup, the gap between current pack costs and the price point needed to compete with a $35,000 gasoline F-150 remains wide. The 90% decline in costs is a real achievement, but the remaining 10% contains the hardest engineering and economic problems. Materials still account for a large share of cell cost, and the minerals involved (lithium, nickel, cobalt, and manganese) are subject to supply chain volatility that no single automaker controls. That volatility complicates long-term pricing strategies and makes it harder for Ford to promise stable sticker prices on EVs in the same way it can for conventional models built around mature engine and transmission technologies.
Ford’s LFP Bet and the Michigan Plant
Ford’s most concrete answer to the cost problem is a shift in battery chemistry. The company announced a new LFP battery plant in Michigan that is wholly owned by Ford and uses know-how and services from CATL, the Chinese cell giant. Lithium iron phosphate chemistry eliminates nickel and cobalt from the cathode entirely, which lowers material costs and reduces exposure to the most volatile segments of the battery supply chain. LFP cells typically offer lower energy density than nickel-rich chemistries but compensate with longer cycle life, better thermal stability, and improved tolerance for frequent fast charging, attributes that matter for fleet operators and cost-conscious buyers more than ultimate range.
Ford plans to deploy LFP packs in versions of the Mustang Mach-E and F-150 Lightning, aiming to shave thousands of dollars from battery costs and broaden the vehicles’ appeal. Building LFP cells in Michigan also aligns with U.S. policy incentives that favor domestic manufacturing and could help Ford qualify more of its lineup for consumer tax credits. The strategy is not without risk: it hinges on executing a complex technology transfer, scaling a new chemistry in high volumes, and persuading buyers that slightly shorter range is an acceptable trade-off for lower prices. But if successful, it could demonstrate that a legacy automaker can re-architect its supply chain quickly enough to compete with both Tesla and emerging low-cost players from China.
Can Legacy Automakers Close the Gap?
The open question is whether moves like Ford’s LFP push and its Michigan investment can fully close the cost gap with leaner EV specialists. New entrants that designed their platforms around batteries from day one enjoy structural advantages: simplified wiring, skateboard chassis architectures, and software-centric electronics that reduce parts counts and assembly time. Ford, by contrast, is juggling parallel product lines, dealer networks, and manufacturing footprints optimized for internal-combustion vehicles. That complexity makes it harder to capture every possible efficiency gain from electrification, even as the company spends heavily to retool plants and retrain workers.
Still, Ford retains assets that newcomers lack: a vast commercial-vehicle business, deep relationships with fleet buyers, and the ability to cross-subsidize early EV losses with profits from trucks and vans. If the company can push battery costs down through domestic LFP production, refine its vehicle platforms to shed weight, and focus on segments where buyers value durability and total cost of ownership over headline range numbers, its EV division could move from a multibillion-dollar drag to a break-even or better contributor. The next few product cycles will test whether physics, chemistry, and corporate restructuring can align fast enough to turn those five billion reasons for concern into a sustainable electric future.
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*This article was researched with the help of AI, with human editors creating the final content.
