In the race to be second to Tesla in the U.S. electric vehicle market, Ford Motor leaped to an early lead four years ago over its crosstown rival, General Motors, with the Mustang Mach E, an electric sport utility vehicle with a design and a name that nodded to its classic sports car.
But the contest looks much different today.
Sales of G.M.’s battery-powered models are starting to surge as the company begins to reap its big investments in standardized batteries and new factories. Ford’s three electric models, including the F-150 Lightning pickup truck and a Transit van, are still selling well but are racking up billions of dollars of losses.
The latest view into how Ford’s quick-start strategy has run into trouble came on Monday, when the company reported that its electric vehicle division lost $1.2 billion before interest and taxes from July to September. In the first nine months of the year, it lost $3.7 billion.
Ford’s chief financial officer, John Lawler, said it was a “solid quarter,” noting that revenue had risen for the 10th quarter in a row, by 5 percent to $46.2 billion. But the company’s overall profit of $896 million in the third quarter was down 24 percent from a year earlier, largely because of problems with electric vehicles, warranty costs and other factors.
“Our strategic advantages are not falling to the bottom line the way they should because of cost,” Mr. Lawler said.
Most automakers other than Tesla are also losing money on electric vehicles and struggling to find their footing. They include Volkswagen, the world’s second-largest automaker after Toyota, and Rivian, a start-up once regarded by auto experts as the next Tesla.
But Ford’s challenges stand in stark contrast to the recent gains by G.M., its main U.S. competitor. G.M. executives say they are close to breaking even on its electric cars by one important measure.
Last week, G.M. reported a $3 billion profit for the third quarter, about the same as a year earlier. Its full-year earnings are likely to approach or surpass $10 billion and could set a record.
Like Ford, G.M. is losing money on battery-powered models, but it does not provide a specific figure. It has said, however, that it expects those models to start to generating “variable profits” by the end of the year. That means each electric car or truck it sells will make money as long as fixed costs like the money spent on factories, machinery and development are not factored in.
“We’re making substantial progress on our E.V. journey toward profitability,” G.M.’s chief financial officer, Paul Jacobson, said in a conference call last week.
A big part of the difference between the two companies, both based in Michigan, is how they approached the new technology. Ford developed the Mach E and Lightning, which preceded the Tesla Cybertruck pickup by more than a year and a half, quickly, in part by using battery packs made by suppliers. LG Energy Solution, a South Korean company, makes Mach E batteries in Poland. The Lightning uses a battery pack made by SK On in Commerce, Ga. Some Mach E batteries are also made in China by Contemporary Amperex Technology Company, known as CATL.
Ford also built dedicated assembly lines for both models and, after strong initial sales, expanded capacity. Then consumer interest cooled, and the company had to quickly cut production and prices, putting profits further out of reach.
Ford’s third model, an electric Transit delivery van, is bought mainly by businesses. The company has not expanded its consumer models beyond the Lightning and Mach E, recently suspending work on a large electric S.U.V.
G.M., by comparison, moved slowly at first, producing primarily the Chevrolet Bolt compact. The company took years to develop modular battery packs that are now allowing it to use the same components in many vehicles. It also started building battery factories in a joint venture with LG Energy Solution.
The idea was to reap economies of scale by using similar batteries in many models — large pickup trucks, opulent Cadillacs and practical family crossovers.
The go-slow approach seems to be paying off. G.M.’s first battery factory, in Warren, Ohio, struggled to get going but is now operating at about 80 percent of its capacity, Mr. Jacobson said. A second battery plant, near Nashville, is at 40 percent and rising.
“Every cell that is produced is cheaper under our joint venture arrangement,” Mr. Jacobson said. “That’s beginning to bring pretty significant benefits.”
G.M. has introduced nine electric models using similar batteries, allowing it to appeal to a wide range of consumers. Several more are on the way, including a battery-powered version of its popular Cadillac Escalade S.U.V. Ford’s Mach E, Lightning and Transit don’t use the same battery components as extensively as G.M.’s cars and trucks.
In the third quarter, G.M. sold more than 32,000 electric models in the United States, about 8,600 more than Ford, according to Kelley Blue Book, a research firm. One model is a Chevrolet Equinox S.U.V. that starts at $35,000; the cost to buyers is lower because the vehicle qualifies for a $7,500 federal tax credit.
The starting price of the Mach E is just under $40,000, and because its battery packs are made outside the United States, buyers are not eligible for a tax credit; the credit may still be available to customers who lease the car.
“G.M. seems to have figured out a way to put out lower-cost, high-efficiency E.V.s,” Mike Ramsey, a Gartner analyst, said.
Ford has been working to streamline its electric vehicle operations. Mr. Lawler said its electric vehicle division had reduced costs by $1 billion this year. Soon, LG Energy Solution will start making Mach E batteries in Michigan, so the vehicle will be eligible for the federal tax credit.
Ford is also building battery plants of its own, one in Kentucky and another in Tennessee, in partnership with SK. A third is being built in Michigan and is wholly owned by Ford. The company says the plants will produce battery packs at much lower costs.
In addition, Ford promises that a new pickup truck set to go into production will be more appealing and cost less, and it has an engineering group in California working to develop affordable battery-powered models.
“We have learned a tremendous amount from consumers,” Mr. Lawler said. “Most of our competitors are launching their first-generation vehicles. We are moving into our second generation.”
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