DETROIT — Ford Motor Co. expects its electric vehicle business to lose $3 billion (all figures in USD) this year, even as it forecasts increased profits on its internal combustion and commercial vehicle operations.
The automaker on Thursday projected that losses from its EV unit, called Model e, will increase nearly 50 per cent in 2023 from $2.1 billion last year as it continues to invest in boosting production and developing next-generation products on a dedicated EV platform. Ford said it expects earnings before interest and taxes of about $7 billion this year for Ford Blue, its internal combustion business unit, and about $6 billion for Ford Pro, its commercial unit.
Those units made $6.8 billion in 2022 and $3.2 billion in 2022, respectively. Overall, the company posted adjusted EBIT of $10.4 billion and $2 billion net loss.
Analysts and investors have long assumed the company's traditional gasoline-powered vehicle business has driven profits and helped fund investments in EVs and other mobility ventures.
But Thursday marked the first time Ford has publicly broken out results for the three units, created as part of a companywide reorganization in 2022, as it changes its financial reporting method. The new way of reporting no longer details how the company did in different regions of the world, such as North America, Europe and China.
"By changing our organization and how we're reporting financial results, we're operating with increased focus, speed and accountability," CFO John Lawler said in a call with reporters.
Ford on Thursday reaffirmed 2023 full-year targets of $9 billion to $11 billion in adjusted EBIT and about $6 billion in adjusted free cash flow. It also said it remains confident in its projections that EBIT margins would be eight per cent for Model e and 10 per cent companywide by late 2026.
Ford later Thursday morning in a call with investors planned to walk through how it will reach the eight per cent Model e EBIT target and provide more details on how each unit fared during each quarter of 2022.
Lawler, speaking to reporters, said near-term EV losses are to be expected.
"Ford Model e is an EV startup within Ford," he said. "As everyone knows, EV startups lose money while they invest in capabilities, develop knowledge, build volume and gain share."
The losses are expected to increase this year because of the money being spent to build manufacturing complexes in Tennessee and Kentucky and to offer alternative battery chemistries, he said.
Still, Lawler said Ford would be "approaching contribution margin breakeven" on EVs by the end of this year. The automaker expects to reach production capacity of 600,000 EVs annually by the end of this year and be able to build 2 million a year by 2026.
Lawler said the Ford Pro unit is expected to nearly double its earnings this year as it prepares to launch a new Super Duty line of pickups and boost output of its E-Transit van.
"Ford Blue and Ford Pro are both solidly profitable today and well-positioned for growth," Lawler said.
