Ford Expects To Lose $3 Billion in 2023 From Its EV Business

Ford expects to lose $3 billion in 2023 from its EV business 8 photos
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Ford has changed how it reports financial results, breaking out the number for each division, Ford Blue, Ford Pro, and Model e. The latter will widen its losses in 2023, as revealed by Ford CFO John Lawler, to $3 billion, up from $2.1 billion in 2022.
Legacy carmakers are still losing insane amounts of money while trying to ramp up EV development and production. With very few EVs to sell and huge investments in production facilities for vehicles and batteries, no wonder the finances look shaky at the moment. Ford makes no exception, as it reported a $2 billion net loss in 2022. This is largely attributed to its EV business, known as Model e. Until now, Ford published financial results by region, which obscured the performance of its EV business.

The Blue Oval announced that starting with Q1 2023, it would break out financial results for the three units created as part of the company’s reorganization last year. For the first time, investors will know how much Ford loses on its EV business, which is more than we can say about other traditional carmakers. This prompted Ford’s CFO, John Lawler, to offer insight during a Thursday briefing for investors and analysts. People have always expected Ford’s traditional business to fund investments in electric vehicles, but the EV losses projected for 2023 might be a little hard to stomach.

According to Lawler, Model e losses will reach $3 billion in 2023 as Ford invests in boosting production capacity and developing new electric models. Still, the company’s gas-powered vehicle business Ford Blue is expected to report earnings of about $7 billion, while its commercial unit Ford Pro will contribute $6 billion to the bottom line.

Ford Pro will be surprisingly profitable, at nearly double the 2022 earnings. The two traditional business units are expected to offset Model e losses and help Ford reach the target of $9 billion to $11 billion in adjusted EBIT and about $6 billion in adjusted free cash flow in 2023.

Lawler warned investors that Model e would function as an EV startup, and losses are to be expected. Ford says this will change as the company builds capabilities and knowledge to scale up EV production. This year’s results will likely be affected by Ford’s plans to set up new manufacturing complexes in Tennessee and Kentucky, as well as invest in alternative battery chemistries.

Lawler reiterated that Ford would reach a 600,000-unit annual production capacity by the end of this year and 2 million a year by 2026. Ford also claims that its Model e unit will become profitable on a pretax basis by the end of 2026. In the meantime, General Motors announced that its EV business would become profitable “by 2025” as it was ahead of Ford to start investing in new factories. As of now, no carmakers except Tesla generate profits from electric vehicles.
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About the author: Cristian Agatie
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After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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