News Story

Ford will lose $4.5B on electric vehicles this year

CEO Jim Farley says company’s future offerings ‘will blow people away’

While Ford Motor Co. and its gas engines are as popular as ever, its electric vehicle unit is expected to lose $4.5 billion in 2023, the company announced last week.

That loss comes even though revenues for Ford Model E, the company’s electric division, grew by 39% for first-generation models, year-over-year. Ford CEO Jim Farley vowed that the EVs to come will “blow people away.”

“The near-term pace of EV adoption will be a little slower than expected, which is going to benefit early movers like Ford,” Farley said in the announcement. “EV customers are brand loyal and we’re winning lots of them with our high-volume, first-generation products; we’re making smart investments in capabilities and capacity around the world; and, while others are trying to catch up, we have clean-sheet, next-generation products in advanced development that will blow people away.”

Michigan Gov. Gretchen Whitmer wants 2 million electric vehicles on the road by 2030. In Washington, President Joe Biden is all-in on using the federal government to accelerate the EV transition, from offering heavy subsidies for buyers, to giving states money to build charging resources, to using regulatory pressure to make the gas engine extinct.

The collection of subsidies and favors for the EV industry helped Michigan double its EV numbers in one year, up to 37,000 in 2022. Ford also recently received a $9.2 billion loan from the U.S. Department of Energy for its three EV facilities down south — two in Kentucky and one in Tennessee.

But even with all that help, Ford did not turn a profit building electric vehicles. Meanwhile, its gas engines are still popular. Ford vehicles were the top sellers in America for the first six months of 2023, the company said.

Ford Blue, its gas engine division, is expected to earn $8 billion for the year. But its EV effort continues to be a struggle.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

Commentary

Michigan creates second education department, but the first has failed

MiLEAP and the school aid budget reflect a trend that lowers the quality of education available to Michigan’s neediest students

Michigan’s new education department aims to expand access to preschool and postsecondary programs. Yet many of Michigan’s students don’t have access to quality K-12 schooling. That’s the job of the state’s first education department.

Gov. Gretchen Whitmer created the Michigan Department of Lifelong Education, Advancement, and Potential, or MiLEAP, to oversee taxpayer-funded programs that serve citizens before and after their K-12 schooling years. It will do this in partnership with the existing Michigan Department of Education. This effort may divert attention from the state’s neediest students in elementary and secondary classrooms.

The newly signed school aid budget expands eligibility for government preschool to families who likely won’t need it. Programs like Head Start and Great Start already provide free early learning to low-income families. The expansion of government preschool, with MiLEAP’s guidance, will target wealthier families and parents who may prefer to wait until kindergarten to enroll their children in school.

The budget also broadens eligibility for the Michigan Reconnect program. High school graduates 21 and over can now attend community college tuition-free through this postsecondary credentialing program.

But the state lacks evidence of the program’s success – it does not even track whether graduates of the program land jobs, for instance. MiLEAP will work to increase participation in Michigan Reconnect, despite the lack of accountability metrics for the program.

These efforts to expand access to preschool and postsecondary credentials are unlikely to produce the results touted by the governor. They are likely, however, to divert resources from K-12 students who desperately need a quality education.

The new school aid budget does too little to improve academics for K-12 students. Whitmer said at the bill signing in Suttons Bay on Thursday that her goal is to “[invest] in education at every level,” The Detroit News reported. But by spreading record-level funding too thin among low-impact programs, the budget will do little to improve learning for students who need it most.

At-risk students who attend online charter schools will receive less funding than those enrolled in conventional district schools. A 5% increase in the per-pupil foundation allowance, or $458 per student, was awarded to all public districts except online charter schools. Many students enroll in online schools due to chronic illness, bullying or homelessness. They will be at a greater disadvantage because of this policy change. And charter schools, unlike conventional districts, cannot raise extra funds through local property taxes, meaning there is already less money available for these students.

The new school aid budget allocates state funding to programs typically covered by local property taxes, such as capital costs and facility upgrades. It also subsidizes many short-term, low-impact projects for select districts and schools. Some schools will receive funding for wellness centers, auditoriums, pools, roofs, track and field facilities, and career and technical training centers. Others will not.

No student, however, will be left out of the universal free school meal program. But this larger ticket budget item won’t do much to help the poor. That’s because the National School Lunch Program already exists to provide the state’s at-risk students free meals. Spending more on school meals means taxpayers are subsidizing increasingly wealthier households.

Together, creating MiLEAP and constructing the school aid budget the way lawmakers did reflects a trend that lowers the quality of education available to Michigan’s neediest students

These initiatives come in the wake of recent legislation that will decrease school accountability and teacher quality. The adoption of House bills 4354, 4166, 4820 and Senate Bill 12 will make it harder to identify and keep effective teachers in the classroom.

The state ought to focus more on allocating its resources to programs that will improve outcomes for K-12 students. Inefficient spending, reduced accountability and overextending financial and other resources will place Michigan’s neediest students at greater risk.

Molly Macek is director of education policy at the Mackinac Center. Email her at macek@mackinac.org.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.