Photo: Ford | Edited
Ford reported its first-quarter financials for 2023, showing that the losses at its 'Model e' EV division are widening. Specifically, the Blue Oval lost over $60,000 for every EV sold in those three months, which means that investors weren't thrilled, even though Ford exceeded overall expectations thanks to its Ford Blue and Ford pro legacy divisions.
After GM, Ford is the second most bullish legacy carmaker about electric vehicles. Its CEO, Jim Farley, boasted about overtaking Tesla in a heartbeat a year ago but has since lowered expectations. As the Blue Oval has started breaking down its financial results for its three divisions Ford Blue (legacy ICE vehicles), Ford Pro (commercial vehicles), and Model e (electric vehicles), it became clear that Ford's EV business is not going very well. Still, Jim Farley showed his optimism in the May 2 earnings call.
Ford posted first-quarter revenue of $41.5 billion, up 20% from Q1 2022, and improved margins of 8.1%, up 1.4 percentage points. Adjusted earnings before interest and taxes rose 45% to $2.4 billion, which should be considered a good sign for the company. Still, investors couldn't overlook that most of that, or $2.6 billion, came from Ford Blue, its legacy ICE business. More worrying, Ford posted losses of $722 million on its EV business, Model e.
Ford sold 12,000 electric vehicles in the quarter, spending $60,000 more per car than its average selling price. Considering that Ford Model e average selling price was around $58,000 in the first quarter, the Blue Oval spent $118,000 on average for every EV it sold. This made Tesla fans joke that Ford should buy a Model Y, slap a Ford badge on it, and still lose less money. The losses are expected to accelerate in the second quarter, as Ford announced an up to $4,000 price cut on the Mustang Mach-E.
Ford F-150 Lightning production was impacted by a battery fire in February, and the Mustang Mach-E production was also halted to upgrade the production line. The EV production at the Ford Model e division dropped from 30K units in Q4 2022 to 12K in Q1 2023. This explains the drop in revenue, but it's likely that the higher production would've led to more significant losses for Ford.
In a call with investors at the end of March, Ford executives warned that its EV business would continue to lose money for the foreseeable future. Ford likened its Model e division to an EV startup, promising the situation should improve when production scales up in the coming years. The total losses for the year are projected to reach $3 billion. Still, Ford expects to approach contribution margin breakeven on EVs by the end of 2023. It also hopes to have 8% margins on EVs by late 2026.
Ford posted first-quarter revenue of $41.5 billion, up 20% from Q1 2022, and improved margins of 8.1%, up 1.4 percentage points. Adjusted earnings before interest and taxes rose 45% to $2.4 billion, which should be considered a good sign for the company. Still, investors couldn't overlook that most of that, or $2.6 billion, came from Ford Blue, its legacy ICE business. More worrying, Ford posted losses of $722 million on its EV business, Model e.
Ford sold 12,000 electric vehicles in the quarter, spending $60,000 more per car than its average selling price. Considering that Ford Model e average selling price was around $58,000 in the first quarter, the Blue Oval spent $118,000 on average for every EV it sold. This made Tesla fans joke that Ford should buy a Model Y, slap a Ford badge on it, and still lose less money. The losses are expected to accelerate in the second quarter, as Ford announced an up to $4,000 price cut on the Mustang Mach-E.
Ford F-150 Lightning production was impacted by a battery fire in February, and the Mustang Mach-E production was also halted to upgrade the production line. The EV production at the Ford Model e division dropped from 30K units in Q4 2022 to 12K in Q1 2023. This explains the drop in revenue, but it's likely that the higher production would've led to more significant losses for Ford.
In a call with investors at the end of March, Ford executives warned that its EV business would continue to lose money for the foreseeable future. Ford likened its Model e division to an EV startup, promising the situation should improve when production scales up in the coming years. The total losses for the year are projected to reach $3 billion. Still, Ford expects to approach contribution margin breakeven on EVs by the end of 2023. It also hopes to have 8% margins on EVs by late 2026.
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