American automaker giant Ford forecasted on March 23 that it would suffer a $3 billion (A$4.49 billion) pretax loss in its electric vehicle business in 2023, per the press release.
In hindsight, its EV business also recorded around $2 billion (A$3 billion) loss last year.
Ford’s legacy vehicles are gaining profits
The Washington Post noted that the recently released financial reporting structure marks the first time Ford disclosed its EV business from its wider operations.
As we all know, the automaker has been keeping up with the rest of its rivals in developing new energy vehicles, including hybrid and electric vehicles. In fact, Ford announced in 2022 its plans to raise its EV expenditure to $50 billion through 2026.
Interestingly, the financial results demonstrate that the profits from the company’s legacy vehicle offerings are being countered by the costly process of developing the “Ford Model e” EV division.
“Ford Blue and Ford Pro are both solidly profitable and well-positioned for growth.”
Ford
Ford’s financial result – 2022
Ford’s gas-powered vehicle unit Ford Blue accumulated $6.8 billion in adjusted revenue in 2022. Meanwhile, Ford Pro’s commercial and government fleet recorded $6.8 billion in the same year.
As mentioned, the Ford Model e suffered a $2 billion loss in 2022.
Despite the forecast, Ford’s stock price increased 1.5% on Thursday, surpassing the wider market.
“As everyone knows, EV start-ups lose money while they invest in capability, develop knowledge, build [sales] volume and gain [market] share.”
CFO John Lawler (via Associated Press)
Ford decided to separate its business divisions
Ford’s decision to separate its business divisions is necessary for the company. CEO Jim Farley even noted that the legacy gas-powered vehicle unit held the automaker back.
“We’ve essentially ‘refounded’ Ford, with business segments that provide new degrees of strategic clarity, insight and accountability to the Ford+ plan for growth and value.
It’s not only about changing how we report financial results; we’re transforming how we think, make decisions and run the company, and allocate capital for highest returns.”
CFO John Lawler
See Also:
- Ford and a Chinese partner plan to construct an EV battery plant in Michigan
- Ford CEO: electric vehicles to require 40% less labor
- Ford declares loss, disbands Argo AI autonomous vehicle unit
- Ford teases the impending launch of a new electric vehicle in Europe
- Ford E-Transit year one: 745,000 gallons of gas saved/12M miles, 57% CO2 reduction
Nonetheless, CFO John Lawler is optimistic that the losses it suffered will gradually improve and bring greater profits in the future. That said, Ford has been pursuing its electrification initiatives, including launching seven new EVs in the European market by next year. It has also been developing EV battery factories in Michigan, Kentucky, and Tennessee.
