Ford's electric Mustang Mach-E is piling up on dealer lots as the automaker confronts an EV-inventory problem

• Ford is bullish about EVs. It's ramping up production and investing billions of dollars.

• But the automaker is having a hard time moving its inventory of Mach-E and Lightning EVs.

• Ford dealerships are selling fewer Ford EVs than they were this time last year, per Cloud Theory.

Ford appears to have an electric vehicle-inventory problem.

In a sign that Ford's EV ambitions are still outpacing demand, the company's sales numbers, amount of EV supply, and dealer sentiment all indicate that the Blue Oval is sitting on more Mustang Mach-Es and F-150 Lightning pickup trucks than it can sell.

Ford dealers sold 86.4% of their Mach-E inventory within 30 days in the second quarter of 2022, but that figure — known as a turn rate — dropped to 27.7% in the same period of 2023 even as the automaker had more than twice as much inventory on the market, according to data from the analytics firm Cloud Theory.

Ford's second-quarter sales of the Mach-E fell 21% from last year (10,941 vehicles) to the same period this year (8,633).

Erich Merkle, Ford's head of US sales analysis, said EV sales were up nearly 12% through June. He also said the unsold Mach-E inventory wasn't just sitting on dealer lots because it spent more time in transit. About 52% of undelivered Mach-Es are still in transit, he said.

Deliveries of the Lighting are also up this year compared with last year when production of the vehicle was still ramping up, but the rate of sales appears to be slowing, according to data from Cloud Theory. The firm said that the automaker sold 70% of its Lightning inventory within 30 days in the second quarter of last year but that it had only sold 39.3% of it within that timeframe so far this year.

Ford is targeting EV production of 600,000 vehicles this year. But while it plows $50 billion into the new programs, it's expecting to lose at least $3 billion in the process and likely won't turn a profit on the segment for three years. In fact, it's losing about $58,000 on each EV it sells (not abnormal for the first few years of a launch.) Hefty rebates and steep price cuts to keep up with Tesla's price war aren't helping profitability, either.

At the same time, it required dealers to spend anywhere from $500,000 to more than $1 million to become "EV certified" to sell the expensive, usually unprofitable vehicles.

That's turning some dealers away from EVs

One East Coast Ford dealer told Insider that Ford's current production rate was out of step with customer demand even though the company was bullish about and invested in EVs. (The dealer spoke with Insider on the condition of anonymity out of concern for professional repercussions. Their identity is known to Insider.)

"I think Ford's got a real problem on their hands based on the bets they've made," they said. "I have Lightnings in stock and Mach-Es in stock. We've never had that before."

Ford dealers are given monthly allocations from Ford's assembly plants based on dealer needs and specific market demands. EV allocation has been a point of contention for some Ford dealers, who have accused the company's EV-sales requirements of violating franchise laws.

"I think production is exceeding demand," the East Coast dealer added. "We are able to decline allocation… We didn't decline any model except EVs." They said, anecdotally, other Ford dealers they spoke with had declined some of their Mach-E allocation from Ford.

Merkle was not able to immediately confirm whether dealers were turning away Mach-E allocations.

The EV market is having its first growing pains

Ford is not alone in its struggle to match EV production with demand. Even Tesla, the world's top seller of electric vehicles, has had trouble with bloated inventory this year, leading to a series of price reductions and deals on Supercharger miles.

GM, a Ford rival that is investing billions of dollars into electrification, also has very low electric-vehicle sales numbers. Through June, GM sold 2,316 Cadillac Lyriq EVs and 49 Hummer EVs. For Hummer, that's compared with 371 deliveries in the same period last year.

This is a reflection of how difficult the next five or ten years are set to be for EVs now that the industry has surpassed the early-adopter market, industry analysts say. Karl Brauer, an executive analyst for iSeeCars, told Insider that a plateau was appearing as the US car industry nears EV sales totaling 10% of the market.

"There seems to be this natural resistance somewhere between 7% and 10% of market share in a given state," Brauer said, citing a recent iSeeCars study that found the states with the biggest EV sales were also the slowest growing. "That seems to be the cap, and then it gets much harder to grow it further."

Lightning orders are still not getting filled

As for the Lightning, Ford said it received more than 200,000 Lightning reservations at the end of 2021, which is expected to create a three-year backlog. Ford reopened its Lightning order book for people without a reservation this spring.

But one Ford dealer in the Midwest, who also spoke to Insider on the condition of anonymity, says many Lightning orders are still sitting uncompleted in the bank for extended periods of time. That leaves order holders plenty of time to pick up a different EV before their Lightning finally arrives.

This could cause problems as these Lightnings arrive on dealer lots, the Midwest dealer said. Many EV sellers have had trouble converting order-holders into owners as many prospective EV customers have made multiple reservations with the plan of taking whichever vehicle arrived first.

Are you in the Ford EV business? Have you bought or considered buying a Ford electric vehicle or have an opinion to share? Contact these reporters at astjohn@insider.com and nnaughton@insider.com.

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