Ford Motor Company expects its electric vehicle business to lose $3 billion this year while forecasting increased profits for its internal combustion and commercial vehicle units.
The automaker projected today that losses from its Model e EV unit will increase nearly 50 percent in 2023 from $2.1 billion last year as investments in boosting production and developing next-generation products on a dedicated EV platform continue.
At the same time, Ford expects $7 billion in earnings before interest and taxes (EBIT) for Ford Blue, its internal combustion business unit, and about $6 billion for its Ford Pro commercial vehicle unit. In 2022, Ford Blue and Ford Pro made $6.8 billion and $3.2 billion, respectively.
The numbers confirm what analysts and investors were assuming, namely that Ford's traditional gasoline-powered vehicle business has driven profits and helped fund investments in EVs and other mobility ventures.
This marks the first time Ford has publicly posted results for each of the three units that were created in 2022 as part of a companywide reorganization, instead of reporting financial results for geographical regions as before.
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According to CFO John Lawler cited by Automotive News, this change enables Ford to operate with “increased focus, speed and accountability.”
In a call with reporters, he also said that near-term EV losses are to be expected from Model e, which operates as a startup. "Ford Model e is an EV startup within Ford. As everyone knows, EV startups lose money while they invest in capabilities, develop knowledge, build volume and gain share," he said.
Ford expects Model e losses to increase this year because it is spending more money to build manufacturing plants in Tennessee and Kentucky and offer alternative battery chemistries, Lawler said.
That said, he expects Ford to approach "contribution margin breakeven" on EVs by the end of this year. The Blue Oval targets reaching a production capacity of 600,000 EVs annually by the end of this year and being able to produce 2 million a year by 2026.
Source: Automotive News