The cost of materials for EV production is rising to point where automakers are unable to make a good profit from them. The
Ford Mustang Mach-Eis a prime example of the crisis.
When it launched in 2020, the EV had a positive profit margin. Now, John Lawler, the company’s CFO, says “commodity costs have wiped that out.”
What’s raising the cost of EV production?
Ford isn’t the only automaker whose margins are shrinking because of production costs. Car companies of all stripes have needed to adapt to
supply chain problemsbrought on by the COVID-19 pandemic and the war in Ukraine.
But electric car production has been hit particularly hard. Besides the higher number of microchips needed for the plug-in powertrain, the rising costs of materials used in
EV batterieshave made it nearly impossible for anyone to turn a profit on these new eco-friendly vehicles.
Lithium, nickel, palladium, and cobalt are key culprits.
Polytechnique Insightssays that over the course of 2021, the cost of lithium rose by 480%. All these precious metals spiked in March 2022. Prices have mellowed a little since then, but not before costing automakers millions.
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How is Ford reacting to the rising cost of Mustang Mach-E production?
The increased costs haven’t deterred Ford from forging ahead with its electrification plans.
Yahoo!says the American auto giant’s $50 billion EV plan is still underway.
The Mustang Mach-E and its new sibling, the new
F-150 Lightning, are just the beginning. Ford expects to build 2 million electric vehicles a year by 2026. The automaker is working to improve its access to materials and bring all its EVs back to net-positive results.
In the meantime, internal combustion engine (ICE) options like the Edge and the recently rebooted Bronco are still being developed by the company to help fund the transition away from fossil fuels.
The income generated from ICE cars gives Ford an advantage over
EV competitorslike Tesla who are all-in on electric cars.
Is the cost of owning a Mustang Mach-E rising, too?
The sticker price of a Mustang Mach-E has risen ever so slightly from where it was when the EV was introduced for the 2021 model year. The base price that year was just under $42,900. Right now, it’s exactly $1,000 more than that.
The Mustang Mach-E’s price might have you thinking of choosing it over more expensive options like the Tesla Model Y, but before you make a decision, you should take a look at average
Coverage for a Model Y averages out to about $1,800 a year. For a base “Select” model Mach-E, drivers pay an average of just over $4,000 a year. Ouch!
Whatever EV you choose, though, you can save on coverage by shopping with
Jerry. A licensed broker that offers end-to-end support, the Jerry app gathers affordable quotes, helps you switch plans, and can even help you cancel your old policy.