Home/ Auto News / Ford Projects $3 Billion Loss on EV Business for 2023

Ford Projects $3 Billion Loss on EV Business for 2023


Auto maker says it wants to give investors more visibility into performance of its three business units

FILE PHOTO: Workers plug in an electric Ford Mustang Mach-e electric vehicle during a press event at the Ford Halewood transmissions plant in Liverpool, Britain, December 1, 2022. REUTERS/Phil Noble/File Photo (REUTERS)Premium
FILE PHOTO: Workers plug in an electric Ford Mustang Mach-e electric vehicle during a press event at the Ford Halewood transmissions plant in Liverpool, Britain, December 1, 2022. REUTERS/Phil Noble/File Photo (REUTERS)

Ford Motor Co. expects to lose about $3 billion on its electric-vehicle business this year, a reminder of how far traditional auto makers have to go in turning their EV portfolios profitable.

Ford disclosed the figure Thursday while outlining a new financial-reporting structure intended to give investors better insight into the performance of its three business units: Model e, its EV business; Ford Blue, the traditional part of the company that sells internal-combustion-engine vehicles; and Ford Pro, its sizable commercial-vehicle division.

Ford Chief Executive Officer Jim Farley last year separated the company’s electric-vehicle business from the part that works on gas-and-diesel-engine vehicles, a strategy he said would allow Ford to move faster as it targets the rapidly growing global market for battery-powered cars.

Historically, Ford has reported profit-and-loss by regions. Now it will break out results for each of the three new business units, rather than providing regional results. Ford said it would use the revised reporting for the first time when it posts its first-quarter financial results, scheduled for May 2.

Ford finance chief John Lawler described the EV division as a startup inside the 119-year-old company, and said it is normal for a fledgling business to rack up losses. Ford today sells three electric vehicles in North America, its largest market: the F-150 Lightning pickup truck, the Mustang Mach-E SUV and a plug-in cargo van.

“Startups lose money as they invest in capability, develop knowledge, build volume and gain share," Mr. Lawler said during a media briefing.

Mr. Lawler said the Model e business will gradually erase its losses and achieve an operating profit margin of 8% by the end of 2026, near the 10% target for the company overall. Last year, Ford’s operating profit was 6.6%.

Mr. Farley in the past has discussed the need for Ford to close the gap on EV leader Tesla Inc. in terms of profitability, citing a cost advantage of more than $10,000 per electric car sold. Tesla lost money for more than a decade before it began posting consistent profits in recent years. Last year, its operating margin was 16.8%.

Also Thursday, Ford reiterated the forecast it originally issued in early February of $9 billion to $11 billion in operating profit this year companywide.

To acclimate investors and Wall Street analysts to its overhauled financial reporting, Ford disclosed the past two years of results for its three business units.

The Model e electric-vehicle division’s losses grew to $2.1 billion last year, from $900 million the year before. Mr. Lawler attributed the mounting losses to investments Ford is making to increase EV production in coming years, including construction of two new battery-cell factories in Kentucky and a third in Tennessee, along with a new plant to make EV trucks.

The traditional Ford Blue business, dominated by sales of its highly profitable F Series pickup trucks, posted operating profit of $6.8 billion last year, more than double that of 2021, when a semiconductor shortage hurt vehicle output.

The company said its Ford Pro division, which sells pickups, vans and other vehicles to general contractors, landscaping companies and other commercial buyers, posted $3.2 billion in operating profit last year.

Ford said it is on target to reach an annualized production rate of 2 million electric vehicles by the end of 2026.

Mr. Farley last year said Ford looked into a spinoff of at least one of its business units but decided against it because they depend on one another and Ford didn’t need to raise capital to fund the transition to EVs.

Executives at rival General Motors Co. have said the company decided against a formal separation of its electric and internal-combustion businesses.

France’s Renault SA has among the most far-reaching strategies for its electric-vehicle business, saying last year that it plans a separate stock-market listing for its EV division. The company will put its conventional gas-and-diesel-engine business into a joint venture with a Chinese company, it has said.

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