{"id":240535,"date":"2023-03-23T10:41:11","date_gmt":"2023-03-23T14:41:11","guid":{"rendered":"https:\/\/www.thedetroitbureau.com\/?p=240535"},"modified":"2023-03-23T10:41:23","modified_gmt":"2023-03-23T14:41:23","slug":"ford-facing-3-billion-in-losses-on-ev-business-for-2023","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2023\/03\/ford-facing-3-billion-in-losses-on-ev-business-for-2023\/","title":{"rendered":"Ford Facing $3 Billion in Losses on EV Business for 2023"},"content":{"rendered":"\n

Well, this might not shock you, but Ford Motor Co. anticipates a $3 billion loss in its electric vehicle (EV) division this year, even as profits increase in its internal combustion and commercial vehicle divisions. <\/p>\n\n\n\n

\"Ford
Ford expects its Model e division will lose $3 billion in 2023 as the automaker continues to ramp up production of its three EVs.<\/figcaption><\/figure><\/div>\n\n\n\n

The automaker said Thursday losses from its Model e EV division will grow by 43% in 2023 from $2.1 billion in 2022. It lost $900 million in 2021. The loss stems from the automaker\u2019s efforts to raise production of its Ford Lightning and Mustang Mach-E EVs while developing its next-generation cars on a dedicated EV platform.<\/p>\n\n\n\n

A Blue Oval transformation <\/h2>\n\n\n\n

\u201cIt\u2019s not only about changing how we report financial results; we\u2019re transforming how we think, make decisions and run the company, and allocate capital for highest returns,” said Ford Chief Financial Officer John Lawler. “We\u2019ve essentially \u2018refounded\u2019 Ford, with business segments that provide new degrees of strategic clarity, insight and accountability.”<\/p>\n\n\n\n

Ford is the second-largest manufacturer of EVs in the U.S. market, one that\u2019s radically changed its corporate structure. By dividing the 120-year-old carmaker into three divisions \u2014 Model e for electric vehicles, Ford Blue for internal combustion engines, and Ford Pro for commercial trucks and vans \u2014 Chief Executive Officer Jim Farley is drastically restructuring the 120-year-old firm.<\/p>\n\n\n\n

But the change in reporting means that Ford will no longer break out results by region, a dramatic change.<\/p>\n\n\n\n

\"Ford
Ford CEO Jim Farley is using profits from Ford Blue to offset Ford Model e losses. However, he wants $2.5 billion in Ford Blue cost cuts in 2023.<\/figcaption><\/figure><\/div>\n\n\n\n

\u201cThis wasn\u2019t a simple proforma spreadsheet exercise,\u201d Ford Controller Cathy O\u2019Callaghan said. \u201cIt represents nearly a year of disciplined work.\u201d<\/p>\n\n\n\n

The numbers that help<\/h2>\n\n\n\n

Like many upstart EV manufacturers have learned, you have to lose money in the EV space before making money, something Rivian, Lucid and Lordstown Motors are in the process of learning.\u00a0<\/p>\n\n\n\n

But Ford Motor Co. has an advantage over its upstart rivals: its old-tech internal combustion business. Known as Ford Blue, it\u2019s estimated to post earnings before interest and taxes (EBIT) of $7 billion, up from $6.8 billion in 2022, while Ford\u2019s commercial unit, Ford Pro, is anticipated to report an EBITA of $6 billion this year, up from $3.2 billion in 2022. Ford has already stated its intention of spending $50 billion to develop EVs through 2026 with the expectation of reaching an EV EBIT margin of 8% and a company-adjusted EBIT margin of 10% by that point.<\/p>\n\n\n\n

“By changing our organization and how we’re reporting financial results, we’re operating with increased focus, speed and accountability,” CFO Lawler said to reporters.<\/p>\n\n\n\n

\"Ford-F-150-Lightning-assembly\"
Ford plans to be at a 600,000-unit run rate for its EVs by the end of this year and 2 million by the end of 2026.<\/figcaption><\/figure><\/div>\n\n\n\n

Old school tech funds the new<\/h2>\n\n\n\n

This is the first time Ford has broken out the numbers for its different lines of business. The numbers reaffirm what investors have long suspected; the company’s gasoline-powered vehicles bring in the bucks and help fund development of EVs and mobility ventures.<\/p>\n\n\n\n

While Ford Blue and Ford Pro are both consistently profitable, Ford Model e is anticipated to be breakeven by the beginning of 2024. Nonetheless, Farley remains critical of Ford Blue\u2019s efficiency, and expects to slash $2.5 billion in expenses from the division this year. But the picture is brighter for Ford Pro, where a new Ford Transit van is expected to fulfill pent-up demand. In all, the company reiterated its guidance of full-year EBIT of $9 billion to $11 billion and $6 billion in adjusted free cash flow.<\/p>\n\n\n\n

By the end of this year, the manufacturer hopes to be able to produce 600,000 EVs annually, rising to 2 million by the end of 2026.<\/p>\n\n\n\n

The news sent Ford (NYSE: F) shares up 1.83% to $11.68 in early trading.<\/p>\n\n\n\n

More to come<\/h2>\n\n\n\n

On Tuesday, May 2, Ford is expected to release its first-quarter financial results. <\/p>\n\n\n\n

Next, on May 22, Ford executives will provide updates on the company’s expanding software and services business, strategic potential, and progress. They will also go in-depth on their plans and key performance indicators for each of their business sectors.<\/p>\n","protected":false},"excerpt":{"rendered":"

Just as you suspected, gas-powered cars are funding the development of their replacements, EVs. TheDetroitBureau.com has Ford Motor Co.\u2019s latest stats, including losing $3B on EVs in 2023.<\/p>\n","protected":false},"author":13752,"featured_media":238891,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[7,8,5,1908,10,1164,4344],"tags":[5118,521,10259,5117,364,3479],"make":[],"post-state":[],"category_old":[],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/240535"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/13752"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=240535"}],"version-history":[{"count":8,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/240535\/revisions"}],"predecessor-version":[{"id":240548,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/240535\/revisions\/240548"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/238891"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=240535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=240535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=240535"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=240535"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=240535"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=240535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}