American legacy automaker Ford released its first quarter results on May 2, marking the first time the company outlined its earnings by division.
These newly released data demonstrated Ford’s weak performance in Q1 2023, particularly in its electric vehicle division.
Ford records substantial loss
Since Ford divided its operations into two divisions on March 2 of last year, namely Ford Model e (EVs) and Ford Blue (ICEs), the latter has been the only one bringing profit for the company. Meanwhile, Ford E remains unprofitable.
Ford Model e reported a $700 million loss before interest and taxes, representing a $100 million increase over the fourth quarter of 2022. Likewise, its Earnings Before Interest and Taxes (EBIT margin) is -102.1%. This figure indicates a twofold increase from Q4 2022’s record of -40.4%.
Furthermore, electric vehicle sales generated $700 million in revenue in Q1 2023. This figure is just nearly 50% of Ford Model e’s sales revenue of $1.6 billion in Q4 2022.
Most interestingly, Ford EV deliveries only recorded 22,000 units in Q1 2023, implying that the automaker lost $58,333 for every EV it sold during this period.
What affected Ford’s weak results?
Ford reasoned that several factors affected this weak Q1 2023 performance, including the higher engineering and spending-related costs, commodities, and other inflationary pressures.
It further claimed that low sales were caused by downtime planned at the Cuautitlan assembly facility in Mexico to raise Mach-E’s capacity to 35 jobs per hour.
For context, the automaker projects that the Ford Mustang Mach-E production will reach 270,000 units in 2023. However, it needed to temporarily close the Mexican plant to prepare it for a major production ramp-up.
Nonetheless, Ford remains upbeat as it anticipates improved operating margins by 2026. Ford projects the EBIT margin to be 8% and plans to continue mass-producing cars through the end of the year. It further declared that the Cuautitlan facility could produce 150,000 F-150 Lightning and 210,000 Mach-E this fall.
Ford CEO Jin Farley also indicated how its Ford+ growth plan is gradually progressing to aid the company’s profitable growth.
“We’re bringing Ford+ to life by zeroing in on what distinct customers need and value the most. Ford Pro is leading the way on profitable growth, our big investments in iconic Ford Blue vehicles and derivatives are winning with customers, and Ford Model e’s different approach to EVs is significantly reducing costs on our first high-volume products while rapidly developing breakthrough next-generation vehicles from the ground up.”
Ford CEO Jin Farley
See Also:
- Ford forecasts a multi-billion dollar loss on its EV business in 2023
- Ford submits an application for EV “burnout mode” patent to USPTO
- Ford E-Transit year one: 745,000 gallons of gas saved/12M miles, 57% CO2 reduction
- Ford plans to produce its next-gen electric truck at the $5.6B factory in 2025
- Ford develops a new autonomous driving unit
In the interim, Ford’s revenues are still being secured by its gasoline-powered vehicles. Ford Blue recorded a $2.6 EBIT and $10.4% operating margin in the first quarter.
