Ford Motor Company’s third-quarter earnings revealed rising EV losses caused mainly by slowing demand and the EV price war initiated by Tesla at the start of the year.

Ford managed to sell 20,962 electric vehicles in Q3, beating General Motors by a slight margin thanks largely to increased Mustang Mach-E production – Mach-E sales rose 42.5 percent in Q3 with 14,824 units sold, 5,872 of which in September alone.

The carmaker’s EV deliveries increased by 44 percent, leading to a 26 percent growth year-over-year in revenue to $1.8 billion for the Ford Model e EV unit.

Unfortunately, that’s where the good news ends for Ford’s EV business. Despite the higher volume, EV losses continued to rise in the third quarter, with the company posting an operating loss of $1.3 billion, up from $1.1 billion in the previous quarter and more than double its loss from Q3 2022.

This means that Ford lost around $36,000 for every electric vehicle it sold in the quarter, surpassing its estimated $32,350 loss per EV in the second quarter. For the entire year, the carmaker expects a full-year loss of $4.5 billion for its EV unit. Why is that, though?

Ford said the Q3 loss is “attributable to continued investment in next-generation EVs and challenging market dynamics.” Regarding the latter, the carmaker noted that “many North American customers interested in buying EVs are unwilling to pay premiums for them over gas or hybrid vehicles.” This puts pressure on EV prices and profitability, according to Ford.

As a consequence of “appropriately balancing the pace of EV investment with the pace of customer demand,” the company said it is scaling back about $12 billion in planned EV investments.

Ford is cutting some Mustang Mach-E production and delaying one of two battery plants it plans to open in Kentucky with partner SK On. The company did not say how long it would delay its EV investments or battery plant. The other battery plant in Kentucky and the Blue Oval City complex in Tennessee remain on track, though.

“The narrative has taken over that EVs aren’t growing; they’re growing. It’s just growing at a slower pace than the industry and, quite frankly, we expected,” Ford Chief Financial Officer John Lawler said on the earnings call according to Automotive News. Lawler said Ford will need less EV capacity in the near term as demand has “softened.”

Mind you, he added that the company is not canceling its planned second-generation EVs, including a three-row utility and a full-size pickup.

Further pressure will be put on Ford’s costs by the tentative agreement with the UAW that includes a 25 percent wage increase for 57,000 workers over a span of five years. Ford expects the new contract to add $850 to $900 in labor cost per vehicle, CFO John Lawler said in a briefing on Thursday according to Reuters.

Ford estimated that the UAW’s 41-day strike resulted in lost production of 80,000 vehicles and cost it $1.3 billion, effectively wiping out $1.2 billion in third-quarter income.