1:49 pm, March 23, 2023
Ford’s EV business has lost $3bn – equivalent to £2.44bn – before taxes over the past two years and is set to lose a similar amount this year, it was revealed today.
The Blue Oval released the figures as it rolled out a new way of reporting financial results, but said the losses were unavoidable as it invested in the new technology.
Ford’s new business structure now separates EVs, the internal combustion and commercial vehicle operations into three operating units.
Officials said the Ford Model e EV division would be profitable before taxes by late 2026 with an eight per cent pre-tax profit margin, but they wouldn’t be drawn on exactly when it’s expected to start making money.
Chief financial officer John Lawler said Model e should be seen as a start-up company within Ford.
‘As everyone knows, EV start-ups lose money while they invest in capability, develop knowledge, build [sales] volume and gain [market] share,’ he said.
He added that Model e was working on second- and third-generation electric vehicles.
It follows the news that Ford’s UK MD fears huge queues at charging points could turn buyers away from electric cars.
Lisa Brankin told the Financial Times: ‘If we are going to switch to 100 per cent electric vehicles, we really need to have a wealth of public charging infrastructure and I’m not sure that there is a plan in place to allow that to happen.
‘We have spent billions of dollars on electric vehicles. It is now coming fast, and we need this.’
Ford currently offers three EVs for sale in the US: the Mustang Mach E SUV, F-150 Lightning pick-up and an electric Transit commercial van.
The new corporate reporting system, Lawler said, is designed to give investors more transparency than the previous system of reporting results by geographic regions.
The carmaker calculated earnings for each of the three units during the past two calendar years.
Model e had pre-tax losses of $900m (£732.22m) in 2021 and $2.1bn (£1.71bn) last year, and is expected to lose $3bn (£2.44bn) this year.
In the past two years, Ford has said it’ll build four battery factories and a vehicle assembly plant, as well as spending heavily on raw materials to build electric vehicles.
By the end of this year, the Michigan-based company expects to be building 600,000 EVs a year, reaching a rate of two million per year by the end of 2026.
Ford Blue, the unit that sells internal combustion and gas-electric hybrid vehicles, made just more than $10bn (£8.14bn) before taxes over the past two years.
Meanwhile, Ford Pro, the commercial vehicle unit, made $5.9bn (£4.8bn) during those years.
For this year, Ford expects Ford Blue to post a $7bn (£5.7bn) pre-tax profit, which is modestly better than last year.
Ford Pro is predicted to earn $6bn (£4.88bn) before taxes – nearly twice what it made last year, said Lawler.
He added that the company was changing how it did business, not just doing an accounting exercise.
‘After 120 years, we’ve essentially re-founded Ford,’ he said.
‘We’re embracing technology and competitive disruption in our industry, fundamentally changing how we’re thinking, how we’re making decisions and how we’re running the company.’
Ford’s chief executive engineer Linda Zhang is pictured unveiling the Ford F-150 Lightning in Michigan in May 2021
